Please enter your name. Welcome to the Instone Real Estate Group SE Q2 2025 Results Conference Call. I'm Matilde, the call operator. I would like to remind you that all participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Burkhard Sawazki, Head of Investor Relations and Capital Market Communication and Strategy. Please go ahead. Thank you, Matilde. Good morning, everyone. I would like to welcome you to our Q2 2025 Earnings Call. Our CEO, Kruno Crepulja, and our CFO, David Dreyfus, will walk you through our presentation and give you an update on our current business performance. As usual, this will be followed by a Q&A session. With this, I would like to hand over directly to Kruno. Yeah, thank you, Burkhard. Good morning, everyone, and thank you for joining our Q2 Earnings Call. In an overall macro environment that continues to be affected by numerous uncertainties, we are pleased to have achieved a very solid set of half-year results. We continue to see very robust demand in retail sales, which has exceeded our own expectations. While we had no retail starts in 2024, we decided to start the sales process of four new projects during the first six months of this year. All of them have been very well received by the market, with strong momentum. These new projects are ideally tailored to the tax incentive scheme of the Growth Opportunities Act, which allows highly attractive cross-practice returns for buy-to-let investors. Accordingly, the trends that private investors have become the most important buyer group was again confirmed in the second quarter. Moreover, we are also witnessing rising demand from owner-occupiers. All in all, we saw an accelerated sales growth in retail sales in the second quarter, with a sales growth rate in the first six months of 58% compared to H1 2024. Sales starts are an important sales growth driver. Following the sales start of four projects in the first six months, we are planning five further sales starts, focusing on retail sales by the end of this year. We clearly expect this to generate additional positive sales momentum in the coming months. It is still quite apparent that the institutional investment market remains more challenging. Our institutional sales for 2025 are geared towards the second half of the year and especially towards Q4 as planned. Against this backdrop, we are glad that we were able to sign our first institutional deal just after the reporting date in July. We sold a medium-sized subproject of the larger projects in the top seven German metropolitan regions. The terms were fully in line with our expectations. I think this was really a good result. We also view this as an encouraging signal that the institutional market is continuing its gradual recovery. The interest from investors is rising, and we are in talks for several other deals. In our last calls, we emphasized that the market environment for project acquisition is making a turn for the better. While we were still very selective last year, partly due to a lack of attractive opportunities, we are now seeing a significantly greater supply of attractive growth opportunities. Accordingly, and in line with our communicated strategy, we are now increasing our investments in our land bank. Currently, we have five deals either just signed or very close to signing, with a total GDV of around EUR350 million. We expect above-average margins and IRRs on our acquisitions. We are taking advantage of the current window of opportunity, and there's more to come. At this point, I think it is also worth mentioning that you can expect continuity and stability at the board level of Instone in the years ahead. The Supervisory Board has extended the contract of my colleague, Andreas Graves, until the end of 2027, and I will also stay on the board for the coming years, which I'm convinced will be a very promising phase for the company. My new contract will run until mid-2029. Let's now take a brief look at our financial KPIs for the first half of 2025. We reached adjusted revenues of EUR 231 million, fully in line with our expectations. We expect a stronger second half, also due to the revenue contribution from the upcoming sales starts of additional projects focused on buy-to-let investors, the signing of institutional deals, and a generally stronger sales seasonality. Our gross margins stayed at a high level of 25.3%. It is once again a strong indicator of our operational excellence. However, in line with our planning, we still expect a slightly lower margin in the second half of the year. Our adjusted earnings after tax amounted to EUR 17.2 million, which also shows that we are fully on track for our full-year financial target. Including the suddenly weakest first quarter, our H1 sales reached EUR 96.3 million. The year-on-year comparison is distorted by an institutional deal in the first quarter of the previous year. As pointed out, the underlying demand indicators currently look clearly positive, with dynamic growth in the retail business. With the contribution of the institutional deal just signed in July, we can expect to see a significant positive year-on-year sales growth in H2. On the basis of the very solid H1 results and the current demand indicators, we are also confirming our outlook for the full year 2025. We expect revenue in the range of EUR 500 million- EUR 600 million, a very healthy gross margin of around 23%, and adjusted earnings after taxes in the ballpark of EUR 25 million- EUR 35 million. Our sales target also remains unchanged at more than EUR 500 million. Moving on to slide four in our presentation. Our sales ratio on the upper chart illustrates our sound sales performance of our retail business. There are usually certain spikes at sales starts and subsequent temporary slowdowns, but the chart clearly demonstrates the underlying upward trajectory of our B2C sales. In the first six months, our retail sales climbed by 58% compared to the previous year, which reflects a further growth acceleration in the second quarter. Our sales ratio currently stands above the long-term mean. A key driver for this targeted development, as mentioned, are additional products we offer to the market with our sales starts. The projects were well received by the market. As mentioned, these projects are ideally tailored to the attractive tax incentive scheme for new builds, which represent a very powerful demand factor. This pipeline will require additional planned sales starts in the second half of the year by buy-to-let investors, which promises additional growth acceleration in our private customer business. General investor sentiment has improved. The rising awareness that German residential prices have bottomed out and that we are entering a new upward cycle with support from dynamic rent growth, especially for new builds, is also a very important reason for this. This top-down view is also heard by institutional investors, even though this customer segment is still lagging behind in the recovery process. There's still a greater reluctance to buy among this group of buyers. Against this backdrop, we are of course very pleased that we were able to sign our first deal year to date already at the beginning of the second half of this year. I also believe that it provides a really encouraging signal regarding our full-year sales targets. The institutional business is, as you know, always seasonally quite back-end loaded, but we can confirm that we are in complete and promising discussions for several further institutional transactions. On the following slide number five, we provide an overview of the sales starts year to date with our current status. As already highlighted in our last call, we have seen an especially strong sales performance of our project in Duisburg at an attractive micro-location close to the border of Düsseldorf. We have already sold almost 60% of the first of two subprojects just within a couple of months. Our digital side Renew, with its innovative product that is based on digital and motherless planning, is responsible for this project. With our new concept, we can offer apartments at a highly competitive price point of around EUR 50,000 per sq m, which contributes to the attractiveness of this innovative product. We have already started construction work and therefore also generate revenues ahead of schedule. We are selling the Landwärter project in Frankfurt predominantly with our internal sales resources. With the current sales speeds, we are well on track for the expected construction start in the fourth quarter. For the project in Schlüggen in Stuttgart, we started the sales process in June after receiving final building permits. We have already seen a very decent number of sales and a significant backlog of notary appointments and reservations. Here, we are also confident that we can start construction this year. The fourth project in Hofheim near Frankfurt has been contributing to our sales since July, and also here we are seeing good momentum. Due to a higher share of apartments, which are more tailored to the demand of owner-occupiers, we anticipated a somewhat lower sales speed for this project. However, we have already collected a decent number of reservations, which makes us confident for this project as well. Again, all of these projects benefit from both the 5% decrease of depreciation in combination with the 5% special depreciation over four years for energy-efficient buildings. On the following slide six and seven, we go with an overview of relevant market indicators for our business. Despite the larger macro uncertainties, prices for new builds in the top seven cities continued their upward trend, and it is at a still moderate pace. The rising scarcity of residential space in the metropolitan areas, which is also reflected in sustained dynamic rent growth, is a key driver for this. This is especially true for highly energy-efficient, good-quality new builds. The rent development in the top cities, based on the data from Federal Statistics Office, is shown on the lower chart on this slide. Rising yields from rental growth were a crucial factor for stabilization of prices after the rate shock experienced during the past years. Rents for new builds are still outpacing price developments and inflation. Therefore, rising yields are making the product even more attractive, and thus demand for new builds should grow. Over to slide seven, which illustrates construction price inflation over time. The most recent data from the Federal Statistics Office confirms a stable trend over the last few quarters with a rather moderate CPI growth. However, I would like to reiterate our statements from the last calls. Based on our on-the-ground experience, the cost price inflation for larger residential projects is lower due to the very favorable competitive situation we are experiencing at the moment. Construction activity for larger residential projects is clearly decreasing. We at Instone are clearly benefiting from this, and not only from a cost perspective. Finally, all of our construction projects are well within budget. Moving on to slide eight, Instone continues to report a very high pre-sales ratio for its projects under construction. This is a key pillar for reducing the operational risk profile and increasing the cash flow visibility. This high pre-sales ratio is an important differentiator compared to our peers. To give you a brief update on this, projects worth EUR 2.5 million are currently under construction, of which 92% have already been sold. This provides a stable source of future revenues of still some EUR 340 million, as well as for secure future cash flows of some EUR 190 million. Over the past two years, we have already generated substantial cash flows from these three four projects under construction, which has led to further strengthening our balance sheet. This now puts us in a position to exploit investment opportunities in the buyer's market for land. As usual, David will elaborate on our balance sheet ratios later in the financial section. We have also done our homework on the approval side during the past years, and we have made good progress in further developing our pipeline despite the existing bureaucratic hurdles. As soon as the market reopens more broadly, we will be able to accelerate our sales significantly with an existing land bank consisting of projects that have already obtained zoning rights of around EUR 1.7 billion at the end of the second quarter. This does not yet include the progress we have just made on our project in Cologne-Bickendorf, which has a GDV of around EUR 650 million. We are ahead of schedule here. By the way, it can also be said that in general, that municipalities are now taking the issue of housing shortages more seriously and are more forthcoming in discussions with a stable partner as Instone. We discussed in the previous call that we are observing a rising supply of attractive buying opportunities in the market. The land market in Germany needed some time for its price adjustment process after the stock market crisis. In 2024, price expectations of sellers were in general not yet at a level which looked attractive to us, but this has changed. Sellers have become more realistic, although we have to negotiate the deals, which always takes some time. The low competitive pressure on the buyer side for larger projects is creating opportunities. With our strong balance sheet, we are capitalizing on this. We discussed our acquisition pipeline in the past, which is now starting to materialize. Currently, we have five land acquisitions very close to signing. Signing is expected either in the coming days or in the coming weeks. The projects are spread over several metropolitan areas across the country, such as Nürnberg, Stuttgart, and Munich, and the GDV in total is around EUR 350 million. Furthermore, we have an extensive acquisition pipeline also with projects under exclusivity, and therefore you can expect additional land transactions during the coming month. We are focusing on projects with a shorter duration, and therefore such acquisitions could clearly help to strengthen our growth profile in the coming two to three years. I would now like to hand over to David for the financial section of the presentation. Thank you, Kruno. Let me now walk you through our H1 2025 financials in a bit more detail, starting with our adjusted results of operations on page ten. Our adjusted revenues are slightly below previous year's level, as expected. This is mainly attributable to the slightly low construction output and to the revenue contribution from an institutional deal in Q1 of the previous year. We expect higher revenues in H2 with a rising revenue contribution from new sales, including institutional deals. Also, in the private customer business, the seasonality is typically stronger in the second half. Additionally, we can expect a rising impact from our various sales starts and the subsequent start of construction works, which is, as you know, the starting point for revenue recognition in our retail business. We have started construction of our new Duisburg project, and we are on schedule for the construction start of our Landwärter project in Frankfurt and Gefilde near Stuttgart. We have continued to produce a very healthy gross margin of 25.3%. Our margin definitely remains the benchmark in our industry. Our cost discipline and cost leadership with our own construction management and the quality of our projects are important structural drivers for this. It is also worth mentioning that we have evidently applied prudent cost assumptions for our projects in an inflationary environment. We do not have any cost overruns. The projects are well within budget. Nevertheless, we expect a somewhat lower margin in the remainder of the year in line with our planning. Our platform costs were slightly below previous year's level despite ongoing cost inflation due to a lower number of FTEs and lower LCI provisions. Further down in the P&L, we saw a further decline in our net interest expenses. This was again largely attributable to the reduction in net debt of some EUR 55 million year-on-year. We expect a slightly higher tax rate in 2025 through earnings contribution from the Berlin-based Equities Joint Venture project, which will be completed this year. Accordingly, we reported an adjusted earnings after tax of EUR 17.2 million, which in our view indicates that we are well on track to reach our full-year earnings targets of EUR 25 million- EUR35 million. Over to page 11. As a result of the significant cash generation from pre-sold projects over the last years, our financial leverage dropped to a very low level, which gives us ample headroom for growth. Our leverage ratios remained largely unchanged over the quarter, despite the cash outflow for dividends. Our loan-to-cost ratio remained at a very low level of 12% at the end of June, despite the comparatively low earnings level at the current cross of the earnings cycle. Net debt to EBITDA is also only at 2.8 x. In light of our planned growth investments, we expect our leverage ratios to increase over the next 18 months. However, you can rest assured that a strong balance sheet will remain a key cornerstone of our business model. Moving to the next slide. Over the past few years, we were able to demonstrate that our business model enables us to generate very attractive cash flows. While we still expect substantial cash contribution from our pre-sold projects, we are now entering the investment phase. This does not only comprise land investments, but also the typical investments in working capital during the initial construction phase for projects catered to retail. As you know, we start construction after reaching a pre-sales ratio of 30%. Accordingly, the cash flow rises over proportionately with sales progress. We expect that the cash requirements for the initial construction phase will largely offset the cash inflow from pre-sold projects. The strong cash generation of Instone resulted in a liquidity position of more than EUR 270 million at the end of the second quarter, and the vast majority is available for land acquisitions. Due to the fact that the debt position contains mainly project-related debt, Instone has a significant net cash position on corporate level of some EUR 130 million. In addition, we have access to revolving credit facilities totaling around EUR 130 million, increasing our potential for land acquisitions. Chart 13 gives an overview of our financing structure at the end of Q2. There were no major changes during the second quarter worth highlighting. Finally, coming to our outlook on page 14. In light of the very solid H1 results and the positive demand indications, we are also confirming our forecast for the full year 2025. We expect a sales volume of more than EUR 500 million, revenues in the ballpark of EUR 500- EUR 600 million, a sustained high margin of around 23%, and a net result in the range of EUR 25- EUR 35 million. With this, I would like to conclude the presentation and move on to the Q&A session. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. You have your turn to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Participants on the call are requested to disable the loudspeaker mode while asking a question. Anyone who has a question may press star and one at this time. The first question comes from the line of Andrei Ronke from Baader Bank. Please go ahead. Yeah, good morning, sir. Thank you for the presentation. A couple of questions, please. I'm starting with the first, on the land plot acquisition. Could you provide some more details on that? What is the potential set outflow you have to pay on? You mentioned EUR 350 million project volume. What is the stage or the average duration to turn them into construction start, and what would be the magnitude of planned gross margins? Hi, Andrei. Looking at the projects, we have two already signed. One is building signed today, and we plan to sign the other two in a couple of weeks. In addition, we have a significant portion of exclusivities where we currently invest a lot of work and plan to finalize those this year. When you look at one example, I think that's when I take one of the projects we have signed recently, which is, from my perspective, a good example for the profitability, etc. One moment, I have to go into the numbers. Roughly, you can say the land price is between 10%- 20% depending on the location. If you are in a top city, then it's more like 20%. If we are in a suburban area, it's like 10%. The gross margin we are looking at is above 25%. We have projects where we are reaching quite two or three percentage points more. More important for us when we look at the current environment is what is the IRR we are targeting. Our initial target is getting more than 20%, but here the projects we are at the ballpark between 25%- 35% due to the fact that we are optimizing also when the land has to be paid, what is the work to be done. We are signing contracts partly where we are generating the building permit and then paying the land, so very late. Here we have the negotiation power to optimize the gross margin and the IRR. Is it sufficient as an answer for you? Yeah, absolutely. If you take an easy speculation for me as an analyst, 15% on average for the land on EUR 350 million means EUR 50 million you have to pay. The question is, do you have to pay it right now or only, let's say, in one or two years? From a cash flow perspective, absolutely, Andrei, the payments vary. Typically, we have made favorable terms where we don't pay immediately. Some of them we pay at the beginning of next year. Some of them we pay during Q4. We're trying to push out the cash out from those land acquisitions as fast as possible. I would say within one or two quarters from the acquisition time. You also asked when those acquisitions, the EUR 350 million that we have mentioned, when they will start the sales or construction period. All those projects are full-term free, targets to start the sales process during 2026 and construction in 2026 or 2027. Okay. Perfect. Thank you very much for the details. The second question is on the stay or dimensions of EUR 55 million, and you call it a medium size. Is this a kind of size you expect also for the potential deals under negotiations? Or in general, what are the deal volumes where the demand is higher from the institutional side? Who are the potential buyers? Are they still the typical buyers or anything worth to mention here? Thank you. Yeah. We have, let's say, what we are targeting for the last quarter of this year on sales. There are projects a bit smaller than the mentioned one. They have one, a bit bigger deal we are planning. I think the size between EUR30 million to EUR 80 million is the ballpark, I would say. The clients are more co-ops than maybe they have been in the past. We have, I think, the institutional buyers classically, and from the past, like Pantry Falls, for example, they are still on the sideline. We have more interaction with co-ops who have the equity, who need to invest, who are, you know, familiar with the regional markets. Here we see a very positive cash flow currently. Thank you. The last question is on your guidance on doing net income guidance after the first half. You already achieved, say, almost 50% of the upper end of the range, and you are expecting an acceleration of institutional views in the second half. It couldn't be a consequence as customers will contribute strongly also to earnings in the second half. Is it fair to assume that even the upper end of your guidance range seems to be conservative? Where do you see the risk of this calculation? Andrei, maybe just give you a couple of elements to this. Number one, we have provided the gross margin guidance of 23%. We are currently at 25%, so gross margin will come down in the second half of the year. Number two, we will have, you know, we do construction progress, which is a large part of the turnover, of our revenues. Sales have some impact, but a large part also comes from revenues that we generate through construction progress. Number three, I think sales volumes, as we just mentioned, when we will be able to complete them during the course of the second half, is also difficult to say. It will most likely be in Q4, and depending on the timing, the amount of revenue recognition also will be different. I think all those elements make us prudent to make any statement on where we will exactly land in terms of the EUR 25 million- EUR35 million guidance we have provided. Maybe one additional comment to that. You know, maybe you have seen the news flow. We have handed over a lot of projects, a lot of units, in the last couple of months, projects which have generated a very high gross margin in the past. Of course, the mix currently is changing. The projects we are now selling are more like, as we already mentioned, the remaining, let's say, portfolio is not at 25%. It's more like 20%- 22%. This, in combination with the very strong margin project which has been finalized in the mixture, brings you to the 23% of gross margin. I think that's really important. Of course, the new projects give us additional margin opportunity, but they are not really influencing the gross margin for this year. Finally, Andrei, one component to add is increasing interest rates, as we mentioned, with the construction starts, build-up of working capital, and the acquisitions. We will see that our net debt will increase, and therefore, interest rates in the second half will also go up. Okay. Understood. Interest cost, sorry. Interest cost, yeah. Yeah, sure. If I may, a very last question, just for the records, on your dividend policy. I brought some more, let's say, just for the last minute action of some of your shareholders, to pay more than originally planned. What could be expected, going forward in terms of dividend quality? When will you have to do your mind whether you have to revise the existing dividend policy? I think one point which is important to mention, our big shareholders are absolutely supporting our growth strategy. I think that's really important to say. We have had the situation that in the last year, we have generated significantly more operating cash flow than we have initially planned. We have always had discussions with shareholders, the one who said, "Okay, you can pay out more dividends and you can stick to your growth plan." Others were saying, "Look, we want the company to invest all the money into growth and pay no dividends." There are different, I would say, thinkings about it. As a management team, I would say that we want to further accelerate growth. We want to invest, but we also want to pay out dividends. Dependent on how many, let's say, payouts do we have, what is the overall situation we are facing, we will discuss this with our key shareholders. We will make a decision for the next AGM. If today it's too early to discuss the dividend payment scheme for next year. Yeah, sure. I have no expectations that you will give me an answer today or during your press release. In general, of course, this is kind of uncertainty versus that from you as a company. Is it fair to assume that you will only provide further information on your general dividend policy at the beginning of next year? That's what I assume? Yeah, I think, you know, when you look at, we have also to be very clear. We have paid out EUR 10 million more, which is not really influencing our growth plan for the company. Also, the shareholder, the big shareholder has not asked for the maximum payout. I think it's, you know, as said, I think it's a discussion we have for years regarding what is the right dividend strategy. We will take this and discuss it with our big shareholders when we have more clarity regarding our investments we have taken. Okay. Fair enough. Thank you very much for this from my side. Thank you, Andrei. The next question comes from the line of [audio distortion]. Please go ahead. Yes, good morning. Thank you for the presentation. Thank you for taking my question. I have two follow-up questions. First, on the institutional business, can you please provide more color on the total number, the total size of projects which are currently under negotiations? Can you maybe also provide some color on the institutional investors who are still not active in the market? What are the key concerns? What are the main topics we're discussing with them? My second question would be on the potential project acquisitions which are still planned until this year. What is approximately the target for institutional acquisition in terms of GDV this year? Thank you. Hi, both. We have currently four projects, in institutional projects where we are discussing with a potential buyer. In regards to the, let's say, concerns of the, for example, pension funds, I think they have a portfolio. This portfolio from the past is more dedicated to commercial investment. We all know that office developments are not really easy. The question for them is, of course, they have to refinance if there is a discussion regarding variation, etc. I think there is a portfolio issue for them. When we talk to them, and I'm not now saying co-ops who are still, let's say, part of our buying group, if I'm talking now about institutional funds or pension funds, they are struggling with their portfolio. They are struggling, of course, a bit with the interest rates still. From my perspective, if you talk to them, what attracts you in the real estate sector, they clearly say it's resi. They clearly say it's resi in the metropolitan areas. It's new build. They have the issues to transform the investments they did in the last decade. This, from my perspective, is one of the main reasons why they are currently on the sideline. The second is in the market where the transaction volume is very low. When you look at the mess and things they did in the past, which was also not really successful, I think they have the problem to be the first move in the market. I think this situation will also change. When we will see the transactions going up, then we will see the classical core money coming back. Our expectation is that it will take some time. Thank you very much. The next question. The target GDV of acquisition, you know, we have targeted EUR 2 billion for this and next year. With the EUR 350 million mentioned, we have made the first step. I think it wouldn't be too optimistic to get to the first EUR 1 billion this year. I think it always depends, you know, project by project. It could be less, it could be more. I don't want to make an exact guidance for this year, but what I want to say is that we have a significant portion of exclusivities where we easily could cover the EUR 2 billion in total. Thank you. You're welcome. We now have a question from the line of Thomas Rothwaldner from Deutsche Bank. Please go ahead. Hi, everybody. A couple of questions. The first is actually on the institutional deal for funds. I was wondering if you could elaborate a bit on the terms. You have seen that we have not pointed out exactly where and what kind of project. We have here an NDA. What I can say is that the gross multiplier, so the gross yield, is roughly at 4%. The starting gross yield is roughly 4%. Okay. It is dedicated to, and this is also important, it's not social housing. It's really a free finance project, no social housing, with a last starting yield of 4%, which describes that we are satisfied with the result of it. I think the buyer can be satisfied too. It's a very, very good project, very nice location. It's always good when both sides are positive. Mm-hmm. That should be the level we should expect also for the next deals. I think it's in the ballpark. I think it's a good indicator, which is a realistic approach, always depending on what is the social housing portion, etc. I think that's a realistic, that's the realistic multiplier. Okay, helpful. The second question is on acquisitions. I mean, you speak of attractive acquisition opportunities. It sounds like you can do both. Sorry, some problems with your line. Can you hear me? Yeah, we can hear you. It's a little slight. It's not. All right. No problem. Yes, on acquisitions. You speak of acquisition opportunities. It sounds like you can do bargains in this market. Just wondering if you could elaborate on the term, please, maybe in terms of land price compared to the previous year. As I understand, we should expect improved margins on these projects. Is this correct? What we currently see is that we are, you know, with our, let's say, negotiation power, we are getting to 25% plus, yes. I don't want to be here, let's say, too optimistic for the next year because, you know, when the market starts to, let's say, to work, this has also an influence on prices. What we currently see is that we are able to generate higher margins than the 25% as a target margin. Regarding the type of projects, we are focusing on two or three. The short-term oriented, the EUR 350 million, I think is a good indicator. This is the result of this, let's say, focus. The second type of projects are bigger projects, where we are benefiting from the overall situation, the pressure in the market, where we can agree with the seller terms, where we are paying and face the. Always with a target of IRR being above 20%. This is in our, let's say, current portfolio easily achievable. An additional comment. In every project, a lot of work. These are not really low-hanging fruits. It's a lot of work you have to invest because, you know, you have to change the design. Maybe you have to discuss it with the municipality, etc., etc., because the former strategy of the project maybe was wrong. Now you have to replace this through a strategy which works. This takes time. This is the reason why we are now seeing the result of it, of the big, let's say, work we have done. That's the market. Germany, you know, price correction very slow, and all the projects are complex. All the projects have to be shaped. This takes time. Okay. The last question is on leverage. I mean, you indicated an increase basically on your increased acquisition activity. What level should be assessed by next year when you should reach the EUR 2 billion GDV that you target to acquire? We will, on the ATC level, move to above 30%, but we will always stay below 40%. We'll move into the region of 30% to 40% on the ATC level. In terms of net debt to EBITDA, that depends a bit on where we end up in terms of our earnings pick up next year. Therefore, to give you an exact number is difficult. Okay. Great. Thank you. Thank you, Thomas. We now have a question from the line of Manuel Martin from Oddo BHF. Please go ahead. Yes, thank you. Good afternoon. One question from my side, please. It's on financing conditions. Maybe you can give us a bit of your impression on financing conditions in the market of project development. What do you see for the sector? What do you see for Instone? If the financing conditions evolve in a better way, do you think that purchasing opportunities could fade away as some of the sellers could be faced through this? I think we have a very differentiated market still out there. We have a lot of our competitors that are still not able to secure financing on the project level even, and not thinkable on the corporate level at all. I think there, you know, it depends on who is asking for financing. We still see that we are able, on every project finance, to secure financing within the terms that we have seen in the past. Terms have not materially changed in terms of margins that we pay. On the project finance, it has come down a bit on the corporate side. The market is still difficult to generate attractive margins. We feel comfortable with our financing we have. We also, at the appropriate time, will be able to secure also financing on the corporate level again. Yeah. I think the interesting thing will be how long the banks are willing to prolong existing loan. I think this is something we are really looking at because it could mean for us additional opportunities, investment opportunities in the market. I think what additionally could cause some trouble for the one or the other competitor is, you know, we are showing our results with a percentage of completion, which means that you have always, you know, the current situation shown by us. The competitors are mainly a balanced, local GAAP. They have shown still positive results because this project has been sold in the past. You know, with a completed contract model, you show very good results, but the overall situation is a different one. We expect that many companies will make losses, and this will further bring in pressure on banks to think about the financing. We will be very, I think, it will be a very, still a very interesting time period in the next 6- 12 months when you look at overall the developers in Germany. Okay, thank you very much. Welcome. As a reminder, if you wish to register for questions, please press star and one on your telephone. The next question comes from the line of Philip Kaiser from Warburg Research. Please go ahead. No, we're on progress to follow up a few different points. Thank you for taking my questions. Starting with an understanding, one with regards to your gross margin. You already elaborated that you expect a lower gross margin in the second half of the year, finally reaching the 23% overall. The same mechanism was last year with also a very strong first half and then a lower second half. Is it just a coincidence or is there seasonality or mechanism behind those different half of the years? Philip, I think that's a coincidence. Okay. Perfect. Thanks. My next point is on the retail sales business, which accelerated further in the first half. Do you expect the business to further accelerate also in the second half of the year? Are there any bottlenecks you see which might dampen potential growth, either on the seller side or on the project side? We are preparing another five projects into the sales start, and we are absolutely in line with our planning. The projects are prepared by getting the building permit, etc. Therefore, there's no risk here. Regarding overall capacities, I think the market, when you look at the appetite of the buyers, is extremely strong. The people, when they understand the scheme, are all attracted. I think the demand is there, and we will find the buyers. Regarding all the other capacities, I don't see bottlenecks. We are absolutely in plan here, and I see from this perspective more chances than risks. Okay. Perfect. Yeah, it was also my kind of my thoughts on that. If you're and it definitely depends on the location or the region you look at, but it's kind of hard to get any such projects. If you would market in two more or three more, you would definitely find buyers. That is kind of the right assumption. On the project side, it is kind of limited. The only kind of bottleneck you probably feel, it's hard to call bottleneck. If you would go into the market with more of these projects, you would definitely find even more buyers for that. Maybe give you just two points to that. One, I think we already mentioned in the past, the highest taxpayers, a number of people are more than 4 million in Germany. You know, we're only tapping so far a very limited part of those. Number two, I think the market awareness of this product is steadily increasing by us selling more. I think the interest we notice is increasing. Rather than reaching a capacity ceiling, we will see quite a long time where you see that the interest levels will increase because the awareness will increase. Yeah. I think what additionally helps us when you look at the Duisburg project, why is Duisburg so, let's say, successfully launched? When you look at the EUR 5,000 per sq m, we are able really to produce cheap. This helps us now, where we can offer a product generating a decent margin, but also offering a product in a price level which is attracting the people to buy. Here we clearly have advantages in the competition to many others. Okay. Perfect. Thanks, [audio distortion]. With regards to your sales volume guidance of EUR 500 million, based on this dynamic in the retail setting, is it fair to assume that it will end up with a 50/50 split in sales volume? Or Or will you eventually, when all the entities have a larger share of this, more than EUR 500 million? I think the 50/50 could be quite a bit, let's say, more to the retail business. We think that looking at overall traction, it could be also a 60/40, 60% retail and 40% institutional. Okay. Perfect. The last one is with regards to the acquisition of Pipeline. There are still some variables out there, and we already secured the EUR 50 million GDV. I'm talking about the EUR 1 billion, probably for each year. Is EUR 150 million in just pure investment volume still a fair assumption for the time being? Yes. As Kruno mentioned, I think, you know, prices, depending on from where we stand in terms of progress done on the building permit, vary between 10% and 20% of the GDV. Yeah. Okay. Perfect. All from my side. Thanks a lot. Thank you for it. We now have a question from the line of Thomas Rothwaldner from Deutsche Bank. Please go ahead. Hi. Just one follow-up, actually, on the tax incentive product. It almost sounds like you are the only player in the market, able to offer ready products here. Is this right, or what would you say? How would you describe the competition there? I wouldn't say that we are the only one who's offering the product. I think we will see more of this coming. It's also related to the necessity to launch such a product. In May last year, we have seen this change. The Q&G 40, which is necessary, this energy standard, all the developers needed time to reshape their design to this. Additionally, you need a building permit to start the sales for the buy-to-let investors. This also needs time. We will see more product coming, clearly also influenced by overall financing conditions. I think that there is a lot of developers who can't really finance the start of the construction. We see here an influence by the overall financing situation, which helps us, of course, because we are able to get the financing. We are able to start the projects. We can start the construction, etc. We have here further advantages in comparison to many of our competitors. Okay, thank you. Thanks, Thomas. Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Burkhard Sawazki for any closing remarks. Thank you for your participation. If you need further information, please do not hesitate to contact the Instone IR team. Many thanks. Goodbye. Thank you. Thank you.