Dear ladies and gentlemen, welcome to the Q1 2021 results presentation of Grand City Properties S.A. At our customers' request, this conference will be recorded. As a reminder, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions. If any participant has difficulty hearing the conference, please press the star key followed by zero on your telephone for operator assistance. May I now hand you over to Ms. Teresa Zale, Manager of Corporate Communication, who will start the meeting today. Please go ahead, madam. Thanks. Hello, and good morning to everyone. Thanks for joining us today. In the name of Grand City Properties, I kindly welcome you to our results call for the first quarter 2021. With me today are CEO and CFO, Refael Zamir, Chairman of the Board of Directors, Christian Windfuhr, COO, Sebastian Remmert-Faltin, and Senior Financial Analyst, Michael Bar-Yosef. Christian Windfuhr and Refael Zamir will guide you through the results presentation directly after this introduction. You will find the results presentation for this call on the company website in the section Investor Relations under Publications. The presentation of the results will be followed by a session with questions and answers. The management is available for questions. We have already asked you in advance to send us your questions by email. Please continue to send us your questions so that we can include them accordingly. Please send your questions to the following email address: info@grandcity.lu. I repeat, once again, info@grandcity.lu. With this, I'll hand over to Christian Windfuhr to begin with the presentation. Thank you, and welcome to all of you also from my side to our first quarter 2021 financial report presentation. The results of the first three months of 2021 are in line with our expectations, and we continue to see stability and resilience of our portfolio and operational platforms. The first quarter 2021 has been marked by further disposals of non-core assets at good gains against book value, improving our financial structure, acquisitions of stable assets, and our share buyback program at a discount to NAV. From a combined volume of EUR 270 million, we have already bought back nearly EUR 90 million in the first quarter of 2020. More details about this will be provided in the next few slides. Q1 was, of course, still affected by the consequences of the Berlin Mietendeckel and the impact of the pandemic, even though we were and still are able to manage well through the pandemic challenges. Let me start the presentation with slide two, where you can follow the highlights of the first quarter 2021. Primarily due to our disposal and recycling of capital in the last year, which we had, on a comparative basis, slightly lower revenue and net rental income in the first three months of 2021, compared to the first three months of 2020 by 5% and 4% respectively. On the other hand, we gained a more quality portfolio with better locations. These declines were offset by our like-for-like rental growth in net rental income, which grew by 1.8%, and further improvements to our cost structure, which decreased the operational income as well as the operational expenses. As a result, our adjusted EBITDA was slightly below the comparable period of last year, and our FFO1 has remained stable. Total assets, EPRA NRV, as well as EPRA NTA, developed positively since December. With this, let me hand you over to Refael Zamir for the following few slides. Thank you, Christian. On slide three, we present our operational profitability. Mainly due to disposals, our net rental income was down in Q1 2021 by EUR 4 million. Property valuation and capital gains were slightly up against Q1 last year by about EUR 4 million, and adjusted EBITDA was down only by EUR 1.3 million due to improved efficiency. Our like-for-like total net rental growth was 1.8%, of which 1.1% came from in-place rent growth and 0.7% from occupancy growth. We have maintained our sustainable growth in net rental income on a like-for-like basis, supporting our operational profitability. We were also able to maintain our efficient cost structure and even improve it by disposal of non-core assets and the acquisition of higher quality assets. Our flexible and efficient operating platform has been able to support our strong business efficiency, even during challenging times previous year and during Q1 2021. On slide four, you can see our FFO1 remains stable at EUR 47 million, while the FFO1 per share declined a bit by EUR 0.01 to EUR 0.27 in the first quarter. The decline in the per share figure is a result of large share account, while the effect of the share buyback was just partial in the reporting period. The FFO 2 amounted to EUR 104 million, supported by EUR 67 million results from disposal of properties. On the following slide five, you can follow our EPRA NAV metrics. Due to the net profit and share buyback program in the first quarter, we were able to further increase our EPRA NAV per share metrics compared to December 2020. The EPRA NTA increased by 2% and amounted to EUR 27 per share as at March 2021, in comparison to EUR 26.5 per share last December. On the same slide five, we also give you some more color on our approach regarding the EPRA NRV, EPRA NTA, and EPRA NDV. Our capital recycling and share buyback, you can follow in more details on slide six. We have disposed of EUR 220 million properties at a premium of 16% to book value. Disposals were carried at an average factor of 17, consist of mainly non-core assets held for sale throughout Germany in secondary cities, mainly in Eastern Germany. At the same time, we have acquired quality assets for approximately EUR 100 million at an average factor of 18, mostly in London. In addition to acquisition, we have started an aggressive share buyback program of up to EUR 270 million, where we buy back shares at a discount to NAV, reinvesting into our portfolio at attractive pricing and providing a high and stable return on a per share basis. We bought back EUR 72 million through a public tender in February and launched a running share buyback program of up to EUR 200 million in March 2021. We have bought back 2% of our shares, which represent a volume of around EUR 89 million as at March 2021. The share buyback, which is done while our share is trading well below the net asset value, will enable us to grow our value creation and profitability on a per share basis. Disposals at a premium to book value in the past periods, while the share is traded at a discount, highlights the disconnection between the value of the underlying business and the capital market. Further, the share buyback is an alternative for acquisition and is a part of our capital recycling. Let me now hand you back to Christian for the portfolio overview on slide seven. Thank you, Refael. In our portfolio overview, you can see that in spite of the disposals mentioned earlier in the presentation, we were able to further increase our investment property by 2% to EUR 8.1 billion. On the back of operational improvements in the portfolio, along with solid underlying fundamentals in the portfolio locations, we achieved revaluation and capital gains of EUR 73 million during Q1 2021. In total, we have just over 60,000 units at the end of Q1 2021. As mentioned before, we have sold non-core assets mainly in secondary cities in Germany, predominantly in Eastern Germany, and that is reflected in less units in Dresden, Leipzig, Halle, and others. Following the overview of our portfolio on slide eight, let us quickly review our portfolio region by region as it stands today. On slide nine, you can see that Berlin makes up 25% of our portfolio value and 16% of our portfolio rent. 70% of our Berlin portfolio is located in top-tier locations, including Charlottenburg, Wilmersdorf, Mitte, Friedrichshain, and others, and the remainder is in affordable locations, primarily Reinickendorf, Treptow-Köpenick, and Marzahn-Hellersdorf. In North Rhine-Westphalia, Germany's largest metropolitan area, we have 17% of our portfolio with Cologne, the fourth largest city in Germany, being the strongest in this location, over one-third, and the rest distributed throughout the region's main cities. On slide 10, we show Dresden, Leipzig, Halle, Germany's dynamic eastern cities with strong fundamentals, which make up our quality east portfolio with 13% of our portfolio. A further 5% of our portfolio are in Hamburg and Bremen, Germany's largest northern cities. Also here, we have a resilient and defensive portfolio with upside potential. Our quality London portfolio on slide 11, meanwhile, makes up 21% of our portfolio and is well distributed in the suburbs of London, with around 85% of these properties situated within short walking distance to underground or overground stations. Total London portfolio consists of approximately 3,100 units and in addition, around 900 units in the pre-let stage. Since acquisitions of our London portfolio, we have been able to bring the vacancy of these properties down from double-digit vacancy. Vacancy in London remains stable in comparison to December 2020 at around 8%. We are currently seeing an upswing in demand now that pandemic measures are being eased, in particular, in recent weeks. Our low entry point into London residential market is both embedding a high upside. Is also very defensive on valuations and cash flows. Gives us a strong buffer to market transactional levels. We have reached a sizable portfolio in London, enabling us to benefit from economies of scale and feel comfortable going forward in maintaining a portfolio size of around one quarter of our total portfolio. The portfolio rental income potential is presented in slide 12. Our current annualized rental income of EUR 443 million at the end of March has an upside potential of 25%, which amounts to over EUR 80 million to reach its full market potential, driven by rent and occupancy growth. We note that the revisionary potential increased back as the rent cap in Berlin is now canceled. This means that we have a strong upside potential for rent increases to market levels with limited downside risk. Only 3% of our units are subject to rent restrictions from subsidization. The average residential tenancy length is around nine years, which basically reflects a period needed to capture the potential without additional future development in the rental market. Recent measures implemented, which increase the calculation period for the Mietspiegel, as well as further such measures proposed in the current election year, do not reduce the upside potential of the portfolio itself. However, they are expected to impact the time required to unlock this potential. Our maintenance and repositioning CapEx on slide 13 was almost EUR 5.2 per sq m during quarter one 2021. The amount is slightly up from EUR 5 per sq m in Q1 2020. EUR 1.4 of this amount went to maintenance, which is similar to last year. The remaining 3.8 to repositioning CapEx. Repositioning CapEx is directed towards improving the asset quality and supporting the letting activities. The repositioning CapEx also includes investments in the surrounding of our assets. As a result, the AFFO for Q1 2021 resulted in EUR 31.8 million compared to EUR 30.6 million in Q1 2020. Now let me hand you back to Refael. Our financial policy present on slide 14 remain unchanged. We keep significant headroom to our financial covenant and continue to maintain healthy relation with the banking sector. As mentioned before, our dividend policy has been updated to 75% of FFO1 per share according to our revised FFO1 calculation and will be effective from 2021. On slide 15, we review our capital structure, and you can see that our LTV is at 33%. Only 4% of our debt is variable. Our cost of debt stands at 1%, a record low for the company. Our average debt maturity is seven years. We have been working continuously on optimizing our debt profile, among other, by repaying high interest-bearing short-term financial debt and replace it with low interest rate debt with longer maturities or using our existing cash surplus. Here, we took advantage of favorable market conditions. This month, we were able to tender successfully approximately EUR 140 million of two of our trade bonds, reducing the bonds outstanding as well as the cost of debt associated with those bonds. As a result of those measures, we have no material maturity until 2026. Debt coverage and credit rating on slide 16 shows that we maintain our very strong interest cover ratio with 6.2. Our unencumbered asset ratio has gone up to 92% of value of EUR 7.6 billion, and our liquidity position remained very strong with EUR 1.7 billion. Our corporate credit rating remains strong with triple B plus by S&P, and our long-term goal remain to achieve a rating improvement to A minus. Christian? Before we move to our guidance, a few words about ESG and sustainability. While equally important as our financial reporting, we have summarized the respective slides in the top position of our appendix of our presentation, and they provide good insight into our ESG results, activities, and goals. Important here would be that we have published on our website our 2020 non-financial report, externally assured by Mazars, and show how we intend to manage material and environmental, social, and governance measures. Furthermore, we have presented for the first time 12 topics identified as material in Grand City's materiality assessment. These insights follow the guidelines developed by the Global Reporting Initiative, EPRA, and the disclosure requirements of the main investor-oriented ESG benchmarks that we participate in. More information regarding our ESG insights can be found on the sustainability section of our website. Needless to assure that the recognition of ESG and sustainability measures, i.e. our excellent scores from Sustainalytics, SAM, CSA, now part of S&P Global, et cetera, have remained as strong as in the past. On slide 17, finally, we confirm our 2021 guidance. While it's still early in the year, we have seen positive developments, and as a result, feel that we are well on track to meeting the 2021 full year guidance, which is FFO1 between EUR 183 million-EUR 192 million. FFO1 per share between EUR 1.08 and EUR 1.13. Dividend per share, EUR 0.81-EUR 0.85. Total net rent like-for-like growth, 2%-3%. LTV below 45%. With this, let me hand back to Teresa for our Q&A. Thank you very much. We are now starting the Q&A session. We will answer the questions we have received by email so far. We have grouped them together for the reasons of simplification. The answers to the questions have been prepared by the team. I will now start with the first question, and answer will be given by Christian Windfuhr. German residential has continued to perform well in 2021. Do you see this continuing for the rest of the year? How do you see the markets developing? The pandemic is a testimony for the resilience and stability of the German residential real estate market, both in terms of operations and in value. This provides us with very high confidence of the strength of our business and of our portfolios. German residential is supported by very strong, sustainable fundamentals, which we expect not to change in the upcoming years. The strong demand for affordable housing is continuing and is unaffected from the pandemic and the lockdowns, while supply of new construction is significantly lagging behind and even reduced during the pandemic. The stability of German residential is supported by Germany's strong employment policies, including its Kurzarbeit system, which provide a dependable safety net. This we see reflected in the stability of operations, not only from our own, but across the entire market. With the economy recovering from the pandemic impact, we expect demographic trends such as strong migration to Germany to return, resulting in increasing population and urbanization, which will further drive demand for affordable housing. At the same time, we see continued slow construction. There are several factors limiting the supply, such as the increasing cost for land and lack of qualified personnel, resulting in significant cost inflation for developers and recently, also significant increase in cost of materials. The COVID-related restrictions and lockdowns have dampened further the future supply due to delays and extended processes. Furthermore, the slow approval process because of constrained bureaucratic processes further increase risks and costs for developers. The widening gap in supply and demand, as well as a mismatch in size of apartments available versus those required by the changing demographic, has resulted in continuously rising rents, occupancies, and values. Market reports and evidence is showing condominium and multi-family housing increasing in all major regions, with particularly strong growth in North Rhine-Westphalia as well as Leipzig. Rental growth was also strong, growing around 3%-4% across the board. When looking at Berlin specifically, we have seen a decrease in rent compared to 2020 due to the implementation of the Berlin rent cap. However, the rent cap results in even higher value increases resulting from the reduced supply. House and condominium prices increased around 7% on average. This confirms that the rent cap has the opposite effect, and the only easing on rents and value are to increase the supply of housing stock and not limiting it. We also see a strong transaction market with transaction volumes in multi-family homes in Germany at 20% higher than 2019. In Q1 2021, we saw these strong market dynamics continue in our own portfolio and operations. We see the strong demand for German residential transactions in our disposal activity, which has allowed us to dispose non-core properties at a significant gain over book value of 16%, generating a total profit of 35% over cost, further validating our portfolio valuations. In addition, continued demand for our properties has resulted in a like-for-like rental growth of 1.8%, including the negative impact of the Berlin Mietendeckel. Of this, 0.7% came from occupancy increases, which helped us reduce our vacancy further to 6.1% as of March 2021. The underlying market fundamentals remaining intact and unaffected by the pandemic, we expect to see this trend continuing in the coming periods. How do you see the development of your London portfolio? Do you see increased demands now that restrictions are easing? What is your target exposure in London? We continue to be positive about the prospects of the London residential market. During 2020 and the start of 2021 has had a larger impact by the pandemic, and the first and second lockdowns were stricter than in Germany. This has had a short-term effect on the market, as on the one hand, there was less demand for housing from, for example, students and young professionals, while at the same time, a strong decrease in tourism reduced the demand for services such as Airbnb, which resulted in increase in supply as these units were offered to the regular residential rental market. Furthermore, the strict lockdowns, which particularly closed down the London housing market, impacted reletting in London more than in Germany. We see these impacts as short-term only and see demand picking up again now that the lockdown is being eased and London returns to normalcy. Similar to what we have seen in the third quarter of last year, when the easing of measures saw a strong increase in activity. We are optimistic towards the general recovery of London from a pandemic, with the U.K. progressing faster than Europe with the vaccination distribution, which shall enable the city to stay open and with no further significant restrictions. We strongly believe in our assets in London, which are located in middle-class neighborhoods throughout the city. The vast majority of properties are located in very short distance from public transportation and as a result, are very well connected, which is highly valuable in a city such as London. Therefore, we are seeing a pickup in letting activities in our portfolio in recent weeks and expect that our vacancies will be filled up and reach a lower level in the coming period, similar to the pandemic levels. We continue to see London as a highly attractive residential market with strong fundamentals, but one that has very unique, diverse, drivers, sorry, and compared to Germany's main cities, resulting in diversification benefits in our portfolio. The market conditions that we have seen over the recent years provided an entry opportunity where we would achieve significant scale at highly attractive yields, while the relatively low price created solid downside protection. However, we are comfortable with our portfolio size in London and expect to slow down our acquisition progress in the city. The London portfolio currently comprises 21% of our portfolio by value, and we expect to remain around 25%. We reiterate that our main focus is on Germany. Where are your acquisitions located? At what multiple did you acquire the new properties? Could you provide some details on your pipeline? In the first quarter, we acquired properties for an amount of around EUR 100 million. The acquisition comprised roughly 400 units at an average factor of 18. Most of the acquisition were in London, of which around 70 units are in the planned stage. The London properties comprise affordable housing options and are located primarily in the London region of Waltham Forest, Hounslow, Newham, Waltham, Harrow, and Bromley, for which we see middle-class demand. We signed acquisition of further properties amounted to over EUR 100 million, which we expect to close in the coming periods. On top, we have a relatively small pipeline of a couple of hundred assets which fit our acquisition criteria. While we continuously scan the market, only a few of potential transactions we see match our criteria and are accretive to our portfolio quality. Furthermore, we have created a strong portfolio in London, which we feel is well diversified within the London market and has a further strategic diversification component to our overall portfolio. As said before, we see the London region at around a quarter from the portfolio. In which areas did you dispose properties and at what multiple were they disposed? Do you have a further disposal pipeline? Do you expect to be a net seller in 2021? In Q1 2021, we disposed around 5,000 units amounted to EUR 220 million. The disposal generated a profit margin of 35% over total cost and were sold at a 16% premium to book value. The properties were sold at an average factor of 17 and consist of non-core assets located mainly in Eastern Germany cities such as Halle, Gera, Plauen, and Görlitz, and in other secondary cities such as Stendal and Mönchengladbach. The disposal of non-core assets allowed us to crystallize the gain from our value add effort and enhance the overall quality of the portfolio, while delivering strong returns to shareholders and validating the conservative nature of our valuation. We expect to dispose the remaining held-for-sale properties in the coming periods. We will do further disposal on an opportunistic basis when we see opportunities for further accretive capital recycling. With acquisition opportunities remaining limited in Germany, are you looking at entry into other markets besides London? Germany will remain the core focus of our portfolio. While we see potential deals in our preferred markets, currently only a few match our acquisition criteria and are accretive to our portfolio quality. As a result, our acquisition activity has been lower as compared to previous years. Regarding growth in new markets, we currently do not see any substantial attractive opportunities, but continue to monitor and acquire in low volume in other residential markets that have attractive fundamentals, such as Warsaw, for example. Any such entry, however, would have to follow our acquisition criteria and needs to be a strategic fit and accretive to the overall quality of the portfolio. Many of your peers have been acquiring development companies in recent years. Do you have plans to expand your development business, potentially through M&A? We have seen quite a lot of vertical integration in recent years. While development can be a significant value driver, it also carries significantly higher risks than rental of existing housing. From our perspective, it is therefore important that there is sufficient downside risk protection in any potential deals, and the development business remains a relatively small part of the total business. Many of the transactions we see in the market are at low yields on cost, forcing a significant part of future development to be built to sell. In addition, many projects we see have been forward sold with operational risks remaining with the developer, both of which we see as bringing significantly greater risks. We believe that as a result, there's no room for error and delays or cost inflation, and which can make such projects uneconomical very quickly. While we will continue monitoring the market for attractive opportunities, any potential acquisitions or expansions into the development business would need to be sufficiently accretive to our net asset value and FFO. For now, our focus remains on extracting the potential embedded within our portfolio, where we see significantly higher flexibility, lower risk, and higher value creation. Our development portfolio can be divided into 2 components. Assets in London, which are in the pre-letting stage and need final CapEx to be finished, amounting to around half of the development portfolio. These are expected to be rented in the upcoming periods and drive internal operational growth. In recent quarters, we have seen a large completion of the pre-letting portfolio, which supported the growth of the London portfolio and provides strong and quality cash flows. The remaining portion of the development portfolio is mostly based in Berlin and is primarily the result of extracting building rights in our existing properties or on plots which we acquired as part of larger deals. Therefore, we see the extraction of building rights as upside potential and with little risk. We intend to develop only if the return will meet our accretive growth thresholds. Could you shed some more light on your valuations? How much of your portfolio was revalued? What were the drivers for the revaluation gains? What are your expectations for the rest of 2021? We recorded EUR 73 million of revaluation gains and capital gains in the first quarter, of which EUR 30 million is related to capital gains from disposals, which were executed at 16% above book value and EUR 40 million was from revaluation gains. We have revalued relatively small portion of the portfolio as we have just recently concluded last year valuation. Accordingly, the value like-for-like was 0.7% in the first three months of 2021. Half of the revaluation came from rent increase and the remaining amount came from yield compression. We work hard to improve the operational performance of our portfolio and expect this drives positively future valuations. We do see additional tailwinds coming from rising yields in the transactions market and from the strong dynamic in German residential. The cancellation of the Berlin rent cap should also have a positive impact on our valuations, and the market is waiting to get more actual transaction evidence to estimate the impact. Could you provide some more details on your rent like-for-like? Which regions contributed most? How much was driven by reletting and how much by indexation? Net rental income as of March 2021 increased by 1.8% on like-for-like basis year-over-year. This amount can be split between 0.7% from increase in occupancy and 1.1% in-place rent increase. The in-place rent increase came primarily from reletting as the contribution from indexation is insignificant in the last 12 months, as the Berlin Rent Cap decrease is impacting negatively this number, and as we halted rent increase in solidarity with our tenants and only resumed rent increase throughout the third quarter of last year. The robust like-for-like, despite the negative impact of the Rent Cap in Berlin, is testament to the benefits of diversification across strong regions. We saw particularly strong like-for-like in NRW, Mannheim, and Leipzig. In London, the like-for-like was a bit negative at -1% due to the strict lockdown in the city in the last year, which we expect to recover in the next period as the restrictions have mostly removed. With few acquisition opportunities, are you planning to expand share buybacks? With few acquisition opportunities, in March, we started a share buyback program with a volume of up to EUR 200 million, in addition to the EUR 70 million bought in February throughout the tender offer. We see the combined buyback volume of around EUR 270 million as a strongly aggressive investment, which provide high and stable return on a per share basis, in addition to acquisition. We have continued to dispose properties, disposing EUR 220 million at a 16% premium to book value, and at the same time continue to see that the share is trading at a discount to our net asset value. The current EUR 200 million program is still running and has around EUR 130 million for buybacks remaining. We currently do not intend to execute an additional share buyback program, although we are authorized to buyback an additional 12% following the approval received in the 2020 AGM. The decision to carry additional share buyback program will depend on further disposal, which will not match with acquisition. Your Series F convertible bonds are maturing in Q1 of next year. Do you plan to repurchase the notes early? Will you refinance with a new convertible? The Series F convertible will be maturing March next year and are currently out of the money, with the conversion price at EUR 23.9. We hold EUR 169 million currently in treasury, and the remaining EUR 281 million remain outstanding. The bond is bearing a very low coupon of 0.25%. Therefore, there is no pressure for us to refinance it, as it is not burden on our results. However, we are tracking the pricing of the bonds, and in case we see an opportunity, we will act on an opportunities basis, but may also just redeem the bond at maturity. GCP plans currently has a cash and liquid asset of about EUR 1.7 billion, which more than cover the required funds for the redemption. Had we have sufficient liquidity, we are currently not planning to issue new convertible bonds. With the verdict from the Federal Constitutional Court that the Berlin rent cap is unconstitutional, do you plan to recoup old rent? How is the rent cap accounted in your like-for-like, and what is the effect on 2021 guidance? To start with, we, of course, welcome the verdict from the Constitutional Court, as the rent only intensified the problem of housing shortage and thus increased the political pressure. The rental cap that was implemented in Berlin was ineffective in providing affordable rents for the market, including the people in need for housing. The rent has reduced the stock of available apartments, and people in need for new housing were faced with a broken market, especially in the affordable segment. People who are able to afford it simply took a different route and bought their own apartment when they couldn't find a rental unit, thus increasing the value for condominiums even more. We have an open dialogue with our tenants regarding the rent due for the period that rents were lowered to below the contractually agreed rent, and consider the cases on an individual basis and in a socially responsible manner. As the Berlin rent cap was revoked in April, the rent reduction in the like for like ending March 8th, 2021 is included, but ongoing forward, the like for like will not include these reductions. As to our FFO guidance, the impact of the cancellation of the Berlin rent cap will not have a major impact on our 2021 guidance as the initial impact from the rent cap was relatively limited to begin with due to our excellent portfolio diversification. How do you see the regulation in Berlin developing, for example, with the renewed calls for expropriation? We are currently seeing renewed interest for expropriation in Berlin. We follow the development around this topic, although we see it as completely illogical, to say the least. Before the discussion of the legality of this suggestion, it must be noted that this measure does not create a single new apartment in Berlin and favors only the tenants of the targeted units, which are only approximately 10% of the city residents, but is paid for by all the city's residents. Therefore, we do not expect a large portion of the city to vote in favor. Please note that while it is likely that the referendum on the issue will be held, it is uncertain whether there is enough support for the financial referendum to pass at least 25% of the eligible votes needed to vote in favor. Assuming only the minimum number of eligible voters cast their vote for the referendum to be valid, meaning that effectively many more need to vote in favor than those that would benefit. Even if the referendum were to pass, it is highly unlikely that the expropriation would be constitutional. There are two main obstacles that we see related to the German Civil Code and the right for ownership. These are the determination of the right compensation payment and basic principles of proportionately underlying German law. Under German law, any compensation due to expropriation is required to be equitable. We do not believe that the state of Berlin has the financial position to fund expropriation. If it were, these funds would be much better used in new social housing developments. In addition, we agree with most legal experts that it is hard to argue that expropriation is an appropriate response serving the public well. Housing is expected to be a key in the 2021 federal elections in Germany. What are your views on this? As a result of the significant supply and demand gap, the housing market is one of the key themes of the federal elections. More rental controls, in particular, is a key part of the programs of the left-leaning parties, SPD, Greens, and Linke. Each of these parties have proposals that would grant states the authority to further limit rent increases with the Linke proposing that states should be able to implement a rental cap similar to the Berlin rental cap, and the Greens having proposed to increase the maximum period for calculation of the rent index to 20 years in the past, which may have a similar effect as the rental cap in many cases. While it is not certain which parties will win, current polling suggests the coalition centered around CDU and the Greens is most likely. We expect that the coalition-building process will moderate regulatory changes as the CDU is generally more in favor of less major market interventions. We expect the discussion will be around reducing the amount of rent increases and not on imposing drastic measures like seen in Berlin rent freeze, which effectively decreases rents. It is important to note that the proposed changes would grant states the ability to implement such rent restrictions. It doesn't mean that such measures will be implemented in all states as we see in the majority of states, not in favor of such extreme measures, but this may bring the attention back to Berlin. That being said, as we have stated in the past, we continue to believe that the only cure for the problem in the housing market is a balance between supply and demand. In recent years, we have seen more strict regulations have not been that effective in halting the increase in market prices and rents. Populist and short-term measures, which are aimed at treating only symptoms and not based on fixing problems, such as the rental cap in Berlin, often result only in intensifying the problem. To achieve a balanced supply and demand situation, the government needs to set the right incentives for a significant investment in housing to close the gap, especially when at the same time, we need to make the housing stock more energy efficient. We see that there is a high degree of willingness to invest, with continued high capital flows into German residential real estate markets. The main bottlenecks are a lack of land for construction, a lack of qualified personnel, and bureaucratic constraints for granting building permits. We believe that the government can best support new construction and, in parallel, for those who fear that housing may become unaffordable, providing them with targeted support and subsidized housing for those families who really need it. There's a lot of talk in the market regarding expected increasing inflation, which leads to increasing interest rates. Do you see inflation in your operations? What is your view regarding the current situation? We do see increased inflation across our operations. First, we are seeing general inflation affecting our day-to-day operation, in particular in personnel cost and external services providers, such as IT. The inflation is manageable and covered by the increase in rental rates in the market, as well as in our own rental growth. As a result, this is not materially affecting our margins. In addition to this, we see price movement in materials in recent months, which we do not see as structural, which impact our refurbishment and construction costs. The pandemic created a supply shock and initial uncertainty regarding demand, which creates ripple effects throughout supply chains, resulting in a mismatch in production capacity utilization to demand, as well as problems with global transportation. This is leading to some shortage and sharp price movement for materials such as wood and steel, which have a delayed supply response, especially to unexpected change in demands. While we think some inflation can stay, the majority of this effect on material pricing, we see as temporary, and we expect this to reduce once supply chain has settled. Supply catches up and demand growth slows down. In addition, as prices initially dropped last year and sales tax has been reduced in Germany, the inflation is distorted when compared to last year prices. So far, we only see a limited impact on this on the cost of our CapEx projects, as those materials compose a relatively small portion of the total construction cost. However, we monitor the situation, but we do not feel that it will affect us materially. If and when the ECB would increase interest rates again, we cannot predict. We assume this won't happen soon, considering that many countries within the EU are worse off than Germany, and their economics will take longer to recover. When rates will increase, we expect that will be in small, incremental steps. Please also note that they are currently still negative. We expect no drastic change in the short to midterm. Could you provide an update on the impact of the new subsidies on your modernization activities? Would the subsidies lead to additional modernization? What would be the impact on the energetic consumption of your portfolio? We are still analyzing the exact impact on planned and potential projects. With correct and thorough planning of new projects, we can apply for more subsidies, but this will take a bit more time. Funds from the subsidy program are expected to be available from July 2021, and have a potential to increase the economic success of projects we have previously determined to not be economical, and reduce dependence on the modernization charges. Currently, it is too early to quantify the amount of projects and the economic and energetic impact on our portfolio. We would carry out additional investment when they would both create a sufficient return and value, in combination with improving the sustainability of our portfolio. Could you shed some more light on your CO2 reduction plans, as well as the effect of the CO2 tax in Germany? Do you include Scope 3 emission reduction targets in your ESG targets? The main pillar of our environmental policy is our target to achieve 40% reduction of CO2 emission by 2030 compared to the 2018 baseline. We aim to achieve this, among others, through continued implementation of efficient heating systems, increased use of electricity from renewable sources, and climate-neutral gas for all assets where we have operational control, and increasing the number of assets with on-site energy systems such as photovoltaic and combined heat and power. We are currently working on feasibility studies for over 50 such properties in our portfolio, and potentially will increase the amount of investment with the newly introduced subsidies. Furthermore, we will continue expanding the EV charging station infrastructure and expand the share of electric vehicles in our fleet. In addition, we are conducting pilot studies regarding net-zero energy buildings, as well as heating and lighting system optimization. Please note that the implementation of these, as well as other measures, will not be linear, and we expect acceleration of CO2 reductions in a few years. We currently do not have Scope 3 emissions included in our targets. Scope 3 is a complex issue for which the total extent is difficult to measure. We are in the process of analyzing our exposure with the help of external experts to plan how to incorporate Scope 3 in our ESG targets and reporting on a step-by-step basis as the implementation of each of the impacts of the company are better understood. In the meantime, we are engaging with our tenants by, among others, providing educational material which increases awareness to their consumption and incentivizing them to use green electricity contracts. Regarding CO2 tax, the total CO2 tax effect, we currently estimate at around EUR 2 million-EUR 3 million, but we are still collecting more data. Our target is to increase the scope of our energy data to cover all of our assets this year, which would provide more certainty. Following the recent agreement of the German coalition parties, the impact will be split 50/50 between tenant and landlord, which would mean an impact on the company of around EUR 1 million-EUR 2 million per year. Thank you. I think those were the questions so far. We will now start the open Q&A part. If you have further questions, we kindly ask you to ask all your questions together right at the beginning. We are now looking forward to your questions, please. Dear ladies and gentlemen, we will now begin our question and answer session. If you have a question for our speakers, please dial zero one on your telephone keypad now to enter the queue. Once your name has been announced, you can ask your question. If you find your question answered before it's your turn to speak, you can dial zero two to cancel your question. If you are using speakerphone today, please lift the handset before making a selection. One moment please, for the first question. As a reminder, if you would like to ask a question, please press zero one on your telephone keypad. The first question received is from Kai Klose of Berenberg. The line is now open, sir. Please go ahead. Yes, good morning. I've got two questions for you. The first one is, could you indicate for how many of the properties in London, for the existing ones as well as for those which you bought in Q1, do you have full ownership or partial ownership? Second question is on the CapEx measurements. Could you indicate for how many units in Germany, for the German portfolio, you have spent so-called energetic reserve, other energetic investments to improve the energetic movement, and how much you spent on this topic for the full year. Hello, Kai. Thank you for the question. Regarding London Q1, they are all full ownership, what we have. On your number 2, CapEx, we have mainly spent CapEx on improving heating systems, we have not spent major money on other energetic activities such as major insulation. We will look at that once we can make use of the grants from the government. I hope that answers your question. Okay. The next question we received is from Oliver Gilber of Truant. Your line is now open. Please go ahead. Hi there. Thank you for taking my call, guys. I just had one question, it was concerning London. I was just wondering if you could comment on the ongoing changes in regulation around cladding of buildings in London, specifically buildings of over four floors. I wonder how much does this impact your portfolio? I know quite a few of these assets are quite new, but do you have a sense for if there's any potential work that needs to be done to the cladding in your London portfolio? Thank you. Thank you for the question. For us, it is nothing material because most of the buildings that we are buying are newly built buildings, so they all meet the standards. Does it answer your question? As there are no further questions, I hand back to you. Okay. Thank you very much for the participation in the call. We wish you all the best. Hopefully, we will be able to meet face-to-face. As you know, we will remain available to your questions that you may have for us, and we wish you well. Thank you very much. Dear ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.