Welcome to the Hamborner REIT AG Q3 2024 Results Conference Call. My name is Alan, and I'll be your coordinator for today's event. Please note this call is being recorded, and for the duration, your lines will be on listen only. However, you will have the opportunity to ask questions at the end. This can be done by pressing star one on your telephone keypad. If you require assistance at any time, please press star zero, and you'll be connected to an operator. I'll now hand you over to your host, Niclas Karoff, to begin today's conference. Thank you. Yeah, good morning, ladies and gentlemen, and welcome to the presentation of Q3 results. As usual, I'm accompanied by members of our team, including my colleagues, Sarah and Christoph. So before we start, I would like to draw your attention once again to the transmission of this event. As described in the invitation, we ask you to dial in either via the webcast link or by telephone. And as usual, active participation in the Q&A session is only possible via phone. But before we start the Q&A, let's move on to the presentation and an overview of the key figures as of 30th of September. Yeah, despite the ongoing difficult environment and sector-specific developments, we were able to continue our business as planned and close the Q3 with further growth in rents and largely stable FFO development. Income from rents and leases increased by 2.8% and amounted to EUR 69.8 million. FFO decreased slightly by 1% due to some income and cost effects, yeah, which we will look at in detail shortly. Operational figures, including WALT and vacancy rate, remained largely stable and are still at a solid level at six years and 3.1%. As a result of the stable earning situation, both the NAV and the key balance sheet ratios were positively influenced in the past three months. So overall, yeah, we look back at another successful quarter. Let's now go into detail and take a closer look at the rent development. Yeah, the already mentioned growth rate of 2.8% was mainly the result of the property additions in July of last year. The additional rents are already reflected in the annualized rents as of 30 September 2023, which are shown on the upper left-hand side of this slide. Based on a year-on-year comparison, we saw further positive income effects from indexations, which amount to EUR 1.2 million or 1.3%. However, indexation effects are offset by negative developments as a result of reduced rents in connection with relettings and an increase in vacancy. In total, annualized rent income was unchanged compared to previous year and amounted to EUR 90.5 million. For the remainder of this year, we continue to expect further but limited positive like-for-like rent effects, mainly from potential vacancy reductions as well as additional index-based rent adjustments. On the next slide, we will take a closer look at the earning situation. As previously mentioned, the top line figure increased by 2.8% to EUR 69.8 million. Income from incidental costs passed on to tenants decreased by around 6%, mainly as a result of the vacancy increase during the year as well as due to outstanding settlements on ancillary costs. Maintenance expenses increased by around 10% year-on-year to EUR 5.7 million. As several planned measures are currently being carried out or scheduled for the Q4, we still expect total maintenance costs of around EUR 10 million for the full year 2024. Admin expenses rose by approximately EUR 200,000 which is a result of our digitalization efforts, yeah, as particularly software license costs are reflected in this P&L item. Other operating income is EUR 400,000 or nearly 30% lower. As in the previous year, the figure is influenced by compensation payments for early lease terminations, which amounted to around EUR 800,000 in 2023 and approximately EUR 500,000 in the current year so far. Despite higher interest rates for the recently refinanced fixed interest rate loans, interest expenses were nearly unchanged in the first nine months of this year. This is mainly due to the repayment of our bonded loan in spring 2023, as well as lower expenses for variable financing. On the other hand, declining interest rates in recent months led to lower interest income from cash deposits, which amounted to around EUR 1.1 million in the first three quarters. The income and cost effects resulted in a slight decline in FFO of 1% to EUR 41.8 million. So a decline of 1% to EUR 41.8 million. Yeah, on the next slide, a few words on the development of our portfolio. Since the beginning of this year, there have been no changes to the property portfolio, so it still consists of 67 properties. In contrast to the previous year, we refrained from carrying out an external portfolio-wide intra-year valuation but made a smaller number of individual value adjustments as part of our half-year reporting. As announced, in recent months, we have been active on the disposal side as part of our active portfolio management approach. And at the end of September, we signed a contract for the sale of a smaller office property in Hamburg, which recently contributed approximately EUR 300,000 to annual rental income. In view of its size, age structure, and sustainability standards, we have classified the property as non-strategic. And at the same time, we were able to achieve a selling price of EUR 8 million, which was 27% above the most recent market value. Yeah, in light of the still difficult transaction market environment, we think a very attractive pricing. As of 30th of September, the property value has been adjusted to the selling price, which led to a slight increase of total portfolio value compared to June. We expect the property to be transferred towards the end of the year, so the rents and earnings effects of this disposal are limited for this year. Apart from the property in Hamburg, we are currently in sales processes with an additional deal volume of around EUR 40 million. At this point in time, we expect signings rather towards the end of the year or the Q1 of 2025, with a result that we do not anticipate any revenue or earnings effects in the current financial year. Returning to the KPI overview, I would like to point out that we have made a reclassification within our portfolio and added one office property in Ingolstadt to the Manage-to-Core bucket. The reason for that is the current rental situation with a reduced wallet in combination with the announcement by tenant to leave the property. The managed-to-core portfolio, therefore, now consists of four properties with a value of EUR 55.3 million or 3.8% of total portfolio volume. Apart from that, our portfolio KPIs do not show major changes and developed largely stable during the last three months. EPRA vacancy rate rose slightly by 20 basis points, 20 bps, compared to mid-year and came in at 3.1%. WALT decreased, but still remains at a high level of six years with 7.2 and 4.4 years in the sub-portfolio. Yeah. Yeah, concerning our tenant structure, in terms of the tenant structure, the past few months have seen minor changes, which is reflected on the next slide. Yeah, and within the top 10 list, only the food retailer Arriva jumped one position. Apart from that, both the ranking list and the sector distribution are nearly unchanged. Main reasons for this are the limited letting tasks in recent weeks, which are also reflected on the next chart. Yeah, the nine-month letting result amounted to approximately 3,000 square meters, only a slight increase compared to end of June, but a significant decline compared to previous year, which was highly influenced by numerous relettings in the large-scale retail portfolio. Apart from our ongoing work on vacancy and early lease renewals, letting tasks will remain limited in the next weeks with only 0.8% of total rents up for renewal until the end of this year. As in the years before, the yeah, and please keep this in mind, the remaining expiring leases mainly include contracts that are renewed on an annual basis, usually shortly before the end of the year. Next slide shows our current financial situation. Yeah, due to limited refinancing requirements and investment activities in the current financial year, our financial liabilities only changed slightly and have been reduced to EUR 687 million, while the average interest costs remain at a very low level of 1.9%. In summer, we were able to refinance the remaining expiring loan in 2024 as planned, so the refinancing activities are completed for this year. Yeah, we are already in initial discussions for the expiries in Q2 2025. And at this point in time, we intend to regularly repay the remaining bonded loan in an amount of EUR 12.5 million in March 2025. As already indicated, EPRA loan-to-value developed positively in the last quarter. Following the increase as a result of the dividend payment and the portfolio value adjustment in June, LTV decreased to 44.4% as of 30th of September. Yeah, in contrast, REIT equity ratio rose slightly to 54.9%. The further debt indicators, net debt to EBITDA and EBITDA to interest coverage, also developed stable and amounted to 9.7 and 5.4 respectively. Yeah, we can therefore conclude that the overall financial situation remains very comfortable. Yeah, ladies and gentlemen, as usual, I would like to conclude the presentation with a brief outlook. Taking into account the stable operational business development in the first nine months of this year and the latest income and cost calculations for the remainder of the year, we see ourselves in a position to substantiate our revenue and earnings forecasts. So for the full year 2024, we expect both income from rents and leases and FFO to be at the upper end of the previous forecast ranges, now at EUR 92.0 million-EUR 93.0 million and EUR 50.0 million-EUR 51.0 million. So the operational result is particularly influenced by the further development of some cost items, including maintenance, personal expenses, and also other operating expenses. Yeah, and with this, ladies and gentlemen, let me finish the presentation and move on to the Q&A. Thanks for your attention, and now we are lookin g forward to your questions. Thank you. If you'd like to ask a question or make a contribution on today's call, please press star one on your telephone keypad. To withdraw your question, please press star two. You'll be advised when to ask your question. We will take our first question from Andre Remke, Baader Bank. Your line is open. Please go ahead. Yeah, good morning. Thank you for the presentation, Niclas. First question, you mentioned a potential disposal volume of EUR 40 million. Do you expect them to come up at around last book values, or any material deviations expected from that? That's the first question, please. I think overall, yeah, it will be around book value from today's perspective, but I mean, we will have to see during the further transaction because you can never say if there are any surprises moving more further ahead. I mean, the transaction we just signed, which I described before in Hamburg, this was, as we think, a very good transaction. But yeah, you shouldn't expect coming from this level that it's going on like this. Yeah, so from today's perspective, I would say around book value, but this is an average assumption. Yeah, so we might come up a little bit. Yeah. Yeah, we will see. If you have executed those first EUR 40 million, will you then be virtually through with your disposal program, or will you also define further potential disposals before you start potential acquisitions for next year? Yeah, I think it would be fair to assume that we intend to continue our portfolio rotation, as I've outlined before, as part of our regular portfolio change, meaning that we identified a couple of assets which we also intend to bring to the market next year. And then we will see that we get a good timing for recycling the money then in combination with the sales activities, yeah, by obviously looking to the market on the acquisition side, which we already do now. And then it's more a matter of finding a good timing of combining both angles. Do you already see some interesting potential acquisition targets, or what are the key characteristics what you are looking for? Yeah, I mean, overall, I think it's fair to say that we would wish to see more attractive assets on them which would fit to our profile. But at the moment, yeah, it's still a bit slow on this side. I mean, however, once in a while, sometimes we find something, but it's not the flow that I would have expected at the beginning of the year, to be honest. Okay, thank you. And then what are your expectations for the year-end valuation process, maybe split it by the two asset classes? Any indication possible at this point in time? I mean, we are just starting now the process concerning our yearly valuation. So yeah, hopefully, you forgive me that I don't want to go too much ahead of this because, as I said, we are just starting it. Yeah, I mean, we will see. I wouldn't expect major changes on the valuation side, but as we pointed out also in our Q3 report, we can't rule out that we might see a smaller dip on the total valuation side here. Is there a difference between retail and offices? I wouldn't differentiate now at the moment, but yeah, I think it's too early to say this. I would say from a risk perspective, overall, I would see a slightly higher risk on the office side. But sometimes, as it is on a if you compare portfolio level and asset level, there can be one asset or two assets which might have, especially if you come from a rather overall low effect, which might have an impact. So it could be. But if you look at the total portfolio level for this asset class, it wouldn't make a major difference where one asset might make a substantial difference, but on a total portfolio level, it's rather limited. So it's always a question where you come from. Yeah, but overall, on a total portfolio level concerning these two asset classes, if we would see some effect, I would rather expect them on the office side than on the retail side. Okay, and the last question, did I get it right that you mentioned that you're expecting a lower vacancy for the remainder of the year until year-end? Did I get it right? Yeah, we expect, but please, we are talking about really limited effects here. Yeah, and this is also in connection with what I pointed out, that some effects or some rental contracts will be signed here within or we expect to be signed within the next couple of weeks, yeah, and having an effect from there. But it's a limited effect. It's not a major effect that we expect. Yeah. Okay. Understood. Okay. That's all my side. Thank you very much. Thank you. We will take our next question from Thomas Neuhold, Kepler Cheuvreux. Your line is open. Please go ahead. Good morning. Thanks a lot for the presentation and taking my questions. I have two. The first is I was wondering if you could provide more color on the conditions on the rental market for commercial assets. You mentioned that reletting rents are slightly down. What is your expectation how this could develop in the next couple of quarters given the current economic situation in Germany? And the second question would be on the refinancing costs. I understand you don't have a lot of debt to refinance in the near future, but I was just wondering from your talks to banks, what kind of all-in refinancing costs you would currently face? These are my two questions. Okay. So on the letting market, we currently see no major, not a major different picture than we have seen a couple of months ago. What I would say is, especially concerning larger, more complex letting situations, negotiations tend to take a bit longer. And yeah, of course, our tenants have made up their mind based on the experiences post the corona time and the experiences from flexible work as well. So we see, and that's what we expect in the future, also additional need for a very intense communication to take up the needs of the tenants. Also concerning sustainability topics, which obviously is also one factor which might lead to negotiations which take a bit longer. But having said all this, apart from this, we see no major changes here on the letting side at the moment. Yeah. Concerning the financing and the refinancing ahead of us, if we talk to the banks, I mean, we started this process in light of what we have ahead of us very early on and have had several discussions already with banks. We meet a very good and reliable communication so far. We have no reason to believe as of today that we have here any points. We are discussing, obviously, concerning the development on financing costs here because that's something which will be of importance for us here. Concerning financing costs as of today, I mean, we see where we are at the moment, and it's difficult for me to predict financing costs here. We simply come from today's level. And yeah, and then we will see where we end up until the end of next year considering the financing market. However, overall, I think we are in a good phase and in a good communication, and it works out so far as planned. Understood. Thanks a lot. We will take our next question from Philipp Kaiser, Warburg Research. Your line is open. Please go ahead. Yeah, and thanks for the presentation. Just a couple of questions from my side with regards to the Hamburg sale. You mentioned that the premium of almost 30% from the latest fair value. Could you give us an indication from when the latest fair value is as a reference? Yes, of course. The reference or the relevant value comes from end of last year from our full-year valuation. Okay. Thanks a lot, and the next question is related to the mentioned EUR 40 million sales pipeline. It might be too early to get a real number, but having a ballpark of the effect on your LTV when you sell those EUR 40 million would have a significant impact or a mild impact on your leverage. That would be helpful. Yeah, I think if we would conclude with all these sales which are behind this volume, you should expect just a very slight decrease on the loan-to-value side. So we do not expect any substantial LTV effect from this. Okay. Thanks a lot. Very helpful. And the last one with regards to the maintenance costs. You already mentioned that you expect to reach the budget to EUR 10 million. That means the majority will come in the last quarter. Do you have an indication of the amount of measures already are kind of started or to get a bit of a broader picture of what might be already fixed of the left EUR 5 million roughly or what might come due to negotiation? I'm not in a position to give you any more details on this at the moment, but what I can show you is that we have had a very intense discussion internally and a very intense look in this topic because we know from past experiences, obviously, that this is something which might, for someone like you or other stakeholders here, might cause questions considering the fact where we are or where we have been as of 30th of September, and it's just a couple of weeks until the end of the year. However, as of today, we think that the EUR 10 million, roughly EUR 10 million, is the number we are working with. And yeah, that's all I can say at the moment. Yeah, because there are so many influencing effects on this topic. But I can assure you we have spent a lot of time on working before we came up with a number. And as of today, hope that this should be the right number, more or less. Okay. Perfect. Thanks a lot. Very helpful. All All from my side. As a reminder, if you'd like to ask a question, please press star one on your telephone keypad now. We'll pause for just a quick moment to allow everyone an opportunity to signal for questions. There are no further questions on the line, so I will now hand you back to your host for closing remarks. Yeah. So from my side, thank you very much for your attention. And if you have any further questions, please just let us know or get in touch with Christoph, and hope to talk to you soon. Thank you very much and have a good remainder of the week. Thank you for joining today's call. You may now disconnect.