Ladies and gentlemen, welcome to the Instone Real Estate Group SE Q3 2025 results conference call. I am Hillei, the Chorus 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 Sawatzki, Head of IR and Capital Market Communication and Strategy. Please go ahead. Thank you. Good morning, everyone. I would like to welcome you to our Q3 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. Hello, everyone, and thank you for joining our Q3 earnings call. We are pleased to report another very solid set of results for the third quarter in a macro environment that is still characterized by considerable uncertainty. We have witnessed a further pickup in demand with strong growth in sales to private investors, which has even exceeded our own expectations at the beginning of the year. Our retail sales surged by some 88% compared to the previous year. The third quarter was the strongest quarter in our private customer business since the emergence of the crisis in 2022. We expect continued very positive momentum also in the current final quarter, with tailwind from seasonality and from further sales starts, which have become a major growth driver. On the other hand, it must be noted that the speed of recovery in the institutional transaction market has not quite met overall market expectations. Overall market uncertainty seems to be having an even greater impact on this segment. Nevertheless, we are making good progress in negotiations on various institutional transactions. Having closed our first institutional deal in Q3 with a volume of EUR 55 million, we are confident that we will be able to sign further transactions by the end of the year. The interest from institutional investors to invest in German residential new builds is definitely rising. We have already pointed out in our recent calls that we see an improved environment for acquiring land. I'm sure you have seen our latest press release on this, that we have already secured projects with a GDV of more than EUR 1.1 billion year to date. This clearly demonstrates that we are currently very determined to take advantage of this window of opportunity and to capitalize on our strong balance sheet to further strengthen our growth profile. We are currently buying projects with above-average returns and mainly with existing zoning or far advanced in the zoning process, too, allowing faster realization. As a result, we anticipate a short-term EPS accretion from these acquisitions. We continue to have a very extensive pipeline, so you can expect further attractive deals in the coming month. Our target is to purchase projects with a GDV of EUR 2 billion by the end of next year. Let's now take a brief look at our financial KPIs for the first nine months of 2025. We reached adjusted revenues of EUR 347.5 million, fully in line with our expectations. We expect a stronger seasonality in the fourth quarter, also due to the revenue contribution. Sales starts, the signing of institutional deals, and the generally stronger sales seasonality in the fourth quarter. Our gross margin stayed at a very healthy level of 23.9%. We believe that this is still the benchmark in our industry and underscores our operational excellence. Our adjusted earnings after tax amounted to EUR 21.4 million, indicating that we are well on track for a full-year target. On the back of the strong retail business and the contribution from our institutional deal, the sales volume increased significantly and reached EUR 229 million. As mentioned, you can expect a strong year-end business and significant rise in the sales volume in the fourth quarter. On the basis of Rock Solid's nine-month performance and the current demand indicators, we are confirming all of our financial and operating targets for the full year 2025. While we want to provide you with a bit more color on where we expect to end up in Q4. We expect revenue to be more likely in the lower half of the guidance range of EUR 500 million-EUR 600 million, and we expect adjusted earnings after taxes towards the midpoint of our EUR 25 million-EUR 35 million guidance. Our sales target of EUR 500 million also remains unchanged. Moving on to slide four in our presentation. Our sales ratio on the upper chart illustrates the sound sales performance of our retail business. There is usually a spike when we start sales and subsequently a temporary slowdown, but the chart clearly demonstrates the underlying upward trajectory of our B2C sales. Our sales ratio of around 2% has reverted to its long-term mean as a sound foundation for our business. In the first nine months, our retail sales jumped by around 88% compared to the previous year, which reflects a further growth acceleration during the third quarter. A key driver for this positive development was, as just mentioned, the acceleration in sales starts. The projects were well received by the market. Our new projects we are offering to the market are ideally tailored to the attractive tax incentive scheme for new builds for private buy-to-let investors. This customer segment has emerged as the most important buyer's group. The tax incentives are a powerful driver of demand, and we expect this customer segment to deliver the strongest growth going forward. As a consequence, we have decided to focus even more strongly on this customer group in our strategy. This includes, for example, establishing our own sales activities and significantly strengthening our sales power, focusing on buy-to-let customers in order to be able to fully capture this attractive business potential. We expect further accelerating sales momentum in the fourth quarter, with support from additional sales starts and general favorable seasonality for our business at year-end. For the full year 2025, we therefore continue to expect 10 sales launches. As a reminder, we did not have any B2C sales starts at all in 2024. For 2026, we anticipate a further increase in the number of sales starts, which will pave the way for a further significant rise in our sales volume. The general investor sentiment is improving. Also, all relevant investor surveys confirm that German residential remains on top of the investment agenda for institutional real estate investors. However, short-term investor appetite remains sluggish, with many investors still preferring to stay on the sideline for the time being. Nevertheless, after having signed our first institutional deal, a subproject of Düsseldorf Grafental, to a local cooperative with a volume of EUR 55 million, we are making good progress on a number of additional institutional deals. We currently have several institutional deals at an advanced stage of negotiation with a volume of around EUR 120 million. Accordingly, we have good reason to be optimistic that we can expect additional signings by year-end, though a deal is only signed when it's signed. Although our assessment at the beginning of the year, like that of most other market participants, regarding the speed of the institutional investment market recovery has not been fulfilled, we nevertheless believe that we are on track to achieve our sales targets for the year as a whole. The stronger retail business can compensate for the weaker recovery in the institutional market. On the following slide, number five, we provide an overview of the sales starts year to date with their current status. We have seen very strong momentum for our projects in Duisburg, at the border of Düsseldorf, Gefylde near Stuttgart, and our Lahnwarte project in Frankfurt. The performance of our project in Duisburg, which is planned and executed by our subsidiary Nyoo, is quite outstanding. We have sold more than 70% of the first subproject within just a few months. The price point of around EUR 5,000 per sq m, which can be achieved with our new product, is considered as highly attractive. Also, the performance of our Frankfurt project is worth highlighting, as we have to date already sold almost 40% just with our own internal sales force. Sales levels for the projects in Duisburg, Frankfurt, and Stuttgart are ahead of our targets, and we thus were already able to start construction ahead of schedule for all these projects. The sales speed for our project in Hofheim near Frankfurt is, as you can see, slower. This is in line with our expectations as the apartments of this project have larger average living spaces and as they are more designed for owner-occupiers rather than buy-to-let investors. We have just recently started marketing of our two latest projects in Nürnberg and in the Hamburg region. Here, the picture has been confirmed. In the first few weeks, we have already secured a substantial number of reservations and notary contracts. The subproject of our Park Residence project in Leipzig is maybe a special situation. The building complex is a listed building. As you can see, we are seeing very strong demand for this product as well. On the following slides, six and seven, we provide you 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 moderate upward trend on a year-on-year basis, with a stable development during the last quarter. The rising scarcity of residential space in the metropolitan areas, which is also reflected in sustained very dynamic rent growth, remains the key factor for the positive underlying development. This is especially true for highly energy-efficient, good-quality new builds. The rent development in the top cities, based on the data from Bulwiengesa, is shown on the lower chart on this slide. Rent growth remains at elevated levels, and property yields of existing properties are witnessing a further yield expansion, while interest costs have stabilized over the last month. Rents are also still outpacing general inflation, which has also stabilized. This provides the foundation for making investments in new-built apartments increasingly attractive to a broader range of customer groups, thereby supporting the ongoing market recovery. Over to slide seven, which illustrates construction price inflation over time. The most recent data points from the Federal Statistics Office confirm a stable trend over the last few quarters with a rather moderate CPI growth. We are also sticking to our own view based on our own on-the-ground experience that cost-price inflation for larger residential projects is currently still considerably lower due to the weak order books of construction companies, which is giving us strong negotiation power. All of our projects are well within their cost budgets. Instone is currently leveraging its strong market position across multiple areas, from securing attractively priced construction services and project opportunities to financing of its investments and also driving sales as a trusted partner to our customers. Moving on to slide eight. Although several projects are progressing well and some have already been completed, our GDV continues to rise. This is driven by the addition of new projects to our portfolio, particularly in the pre-sales phase, which is reflected in the growing share of this segment in the pie chart. Our operational risk profile remains at a comparatively low level as we maintain a very high pre-sales ratio of 91% of our projects under construction. This is also providing a high level of cash flow visibility and is clearly a key differentiator compared to our peers. Our pre-sale projects provide a stable source of future revenues of around EUR 350 million, as well as for secure future cash flows. Over the past two years, we have already generated substantial cash flows from these pre-sold projects under construction, which has significantly strengthened our financial position. We are now leveraging this financial firepower by acquiring new projects with clearly above-average return potential. We have secured and acquired land plots for projects with a GDV of more than EUR 1.1 billion year to date. Approximately half of this volume is planned to be realized in cooperation with strong financial investors through joint ventures. These potential GDV structures are particularly relevant for large-scale projects and offer significant benefits. They enable optimized risk diversification across our portfolio and enhance return on equity by the generation of additional income streams from the project partner. We still have an extensive deal pipeline, and as we already mentioned, it seems pretty likely that you can expect further land acquisitions in the coming month. We have set ourselves the target of acquiring projects with a GDV of EUR 2 billion by the end of 2026. We currently see an ideal window of opportunity for acquisitions, with the property market having bottomed out, with the rising supply of attractive buying opportunities, with prices for landlords having undergone a significant price correction, and with very low bidding competition. We are currently focusing on projects with a shorter duration, and therefore our acquisitions should clearly help us to further strengthen our growth profile in the coming two to three years. With our existing portfolio, 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. As soon as the market reopens more broadly, we will be able to further accelerate our sales with our existing land bank, consisting of projects that have already obtained construction rights of around EUR 1.9 billion at the end of the third quarter. With this, 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 Q3 2025 financials in a bit more detail, starting with our adjusted results of operations on page 10. Our adjusted revenues are slightly below previous year's level, as anticipated. This is mainly attributable to a slight decline in construction output. However, with stronger seasonality expected in the fourth quarter and the expected signing of several institutional deals, we anticipate Q4 to be the strongest, also in terms of revenue recognition. Thanks to better-than-expected sales performance and the earlier-than-planned start of construction of our projects in Duisburg, Frankfurt, and Stuttgart, we will also see accelerated revenue contribution from these projects in the fourth quarter. Accordingly, we are confident and well on track to achieve our revenue guidance. We have continued to deliver a very healthy gross margin of 23.9%, which remains an industry-leading profitability at this stage of the cycle. The result shows us also to be well on track to achieve our full-year margin target of around 23%. To put this into perspective, even at the trough of the cycle, we are generating higher margins than many of our competitors, including larger ones, were able to generate at the peak. This is a strong testament to our operational excellence. Moreover, the projects we are currently acquiring are expected to lay the foundation for further margin expansion in the future. Our platform costs were slightly below previous year's level, despite ongoing cost inflation, mainly due to lower LTI provisions and also due to a lower number of FTEs. Further down in the P&L, our net interest expenses increased slightly during the third quarter. This was attributable to a slight increase in net debt, mainly due to our investments in working capital. As a result, we reported an adjusted earnings after tax of EUR 21.4 million, reflecting very solid profitability despite the current bottom of the cycle and fully in line with our expectations. Over to page 11. Thanks to the significant cash generation from pre-sold projects in recent years, our financial leverage dropped to a very low level, which gives us ample headroom for growth. While we have started to deploy our capital into new opportunities, as Kruno has just mentioned, our leverage ratios have increased only marginally and stayed at a very low level. A low loan-to-cost ratio of 13.6% and the low net debt to EBITDA of 3.1x clearly reflect our strong financial position. Although in light of our planned growth investments, you can expect our leverage ratios to increase steadily. However, I would like to reiterate our statement that a strong balance sheet will remain a cornerstone of our business model. Moving to the next slide. Over the past few years, we have been able to demonstrate that our business model has the capacity, capability, and capacity to produce very attractive cash flows. While we still expect substantial cash flows and cash contribution from our pre-sold projects, we have now just entered a new growth and investment cycle. We are clearly committed to taking advantage of the current window of opportunity for land purchases and acquiring projects with above-average return potential. We are going to acquire projects with a GDV of some EUR 2 billion by the end of 2026. This corresponds to expected total acquisition costs of around EUR 300 million. Part of this will be financed, and part of it might be borne by project partners. As Kruno mentioned, our potential JV partners. In addition to investments in land, there will also be a temporary increase in cash requirements for existing projects. This is mainly attributable to the typical cash flow profile of residential projects, where typically investments must be made in working capital during the early construction and sales phase, with cash flows turning positive with increasing sales levels and construction progress. We have a chart on our cash flow of a typical retail project in the appendix of our investor presentation. The strong cash generation of Instone in the past resulted in a liquidity position of more than EUR 220 million at the end of the third quarter, with the vast majority being available for land acquisitions and some for the sales and construction ramp-up, as just mentioned. 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 150 million. Just as a side note, our debt covenants relate primarily to our corporate net debt position and not to our total debt position, including project debt. Thus, our corresponding debt ratios in relation to our covenants are extremely comfortable. In addition to our cash on hand, we have access to revolving credit facilities totaling around EUR 140 million, increasing our financial firepower for land acquisitions. Chart 13 gives an overview of our current financing structure. There were again no major changes during the quarter worth highlighting. Thus, I would like to move on to our final page, page 14. In light of our very solid nine-month results and our current business development, we are also confirming our forecast for the full year 2025 and would like to provide a bit more color on where we expect to end up in Q4. We expect our sales volume to reach EUR 500 million. We expect adjusted revenues to be more likely in the lower half of our guidance range of EUR 500 million-EUR 600 million. A sustained high gross margin of around 23% is expected. Bottom line, we expect an earnings after tax approximately to with the middle of our guidance range of EUR 25 million-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 the telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questions on the phone are requested to disable the loudspeaker mode while asking a question. Anyone who has a question may press. First question comes from the line of Thomas Rothaeusler from Deutsche Bank. Please go ahead. Good morning, all. Yes. The first one is on the institutional business. Just wondering what it takes, what you think it takes for a more meaningful recovery there. Hi, Thomas. Let's dive a bit deeper into the institutional market to give you here our, let's say, our experience we are currently making. What we are seeing generally is that rent price inflation remains high. This gives the owners of properties, of course, the possibility to increase the property yields, which is positive. On the other hand, we are seeing falling completion rates, which are further outpacing the CPI, which should support, of course, the sales volume going forward. The fast recovery here. In the first market phase, the investors were focused more on newly built residential assets, which have been finished but not sold yet. We've seen here a lot of traction in the market. Market segment is, I would say, sold out. This should help us going forward. There is no real supply of such kind of product, which we expect in the next, let's say, next time period because it is all already sold. This is, I think, positive. What we also see is that the investors are focusing on the top metropolitan areas, really the top cities. This is also the reason why we focus in acquisition exactly to the same profile, acquiring projects which we can sell to B2B but also B2C clients. Now, what do we expect going forward, and how are our current discussions we have with investors? The appetite of investors is there. The attractivity of RESI is, from our perspective, there and increasing steadily. The problems which investors are currently having is, on one hand, refinancing pressure. Many investors are focused on refinancing existing office portfolios. They have, of course, discussions with the banks regarding valuation. Therefore, this is limiting clearly the capacity for new acquisitions. We see also slow recovery of capital inflows. This remains sluggish. There is a cautious investment sentiment. Overall, we think that 2026 will be better, massively better than 2025, but by far not normalized as we have seen pre-crisis. I think potential acceleration factors are, of course, the further interest rate developments, potential subsidies of the government. This is the current situation we are seeing in the market. Okay. Another question on the retail business. I mean, you're significantly scaling up your activities there. Just maybe to get a bit more color on what could be the sales volumes there, maybe for next year or if you're shy of guiding next year and maybe in general, just to get a better understanding of t he ramp-up. It is, of course, a bit too early to give a clear guidance on 2026. What we can say is that the number of sales starts we plan for next year will significantly be above what we have launched in this year. I think we can nearly double the sales starts for the coming year. This gives you, I would say, a good feeling for what is possible in the B2C buy-to-let investor market. We see a very strong appetite. We have designed all the, let's say, the sales starts really mainly to the buy-to-let investor space. We see very, very strong momentum here. This momentum we want to also additionally increase by our sales organization, which we already have started to build up. We have built up a company together with partners to. Improve and to increase the volume in sales. Additionally to the existing very good-performing sales platforms we are partnering with. Here, we think that this could be a significant driver going forward to increase the sales volume in the buy-to-let investor space. How do you look at the competition for this tax incentive product? I mean, do you see more competitive products coming to the market? Of course, we are not the only one who is offering the product. There is still, I would say, a limiting factor. On one hand, the developers. There is only a very limited number of developers who are able to start construction to get the construction financing. When we look at acquisition, and we are acquiring a significant number of projects which perfectly fit to buy-to-let investor space, being top cities, metropolitan areas. Here, we do not see really competition from, or let us say we see competition, but it is, of course. Let us say, very, very low on a very low level. There is only a very limited number of companies who are able to buy land and to start construction, getting the financing, and this is limiting the supply of this kind of product. Yes, thank you. You are welcome. The next question comes from the line of Philipp Kaiser from Warburg Research. Please go ahead. Yeah. Thanks a lot for the presentation and for taking my questions. Just a couple of follow-ups. I would start also with the institutional business. You mentioned during the presentation that you are in advanced negotiation with institutional investors and also quoted a volume of roughly EUR 120 million. Could you elaborate a bit more on the deal size of any deal? Is it, yeah, roughly in the ballpark, EUR 40 million-EUR 50 million each? What we can say is that we have one project which is roughly EUR 60 million-EUR 70 million, and then we have additionally three to four smaller deals with EUR 10 million-EUR 20 million. Okay. Perfect. Very helpful. With regards to the retail segment, I'm looking back at the history also printed down on the page for the last quarter, tend to be the most active one. Do you expect this also to be true for the last quarter of this year? Do you have already any visibility? Yes, we have. As I already mentioned, we have further increased the volume of sales starts in the last quarter. It is like always that the first few weeks and few months with sales starts, the momentum is quite huge. You're generating significant numbers of sales. Therefore, we believe that the last quarter will be by far the strongest quarter this year. Perfect. Is it fair to assume that will be true? You just only need a couple of those intermediates to close to reach what you also stated, the lower end. That is kind of a bit, yeah, risk averse due to the strong last quarter of the retail segment. Yeah. Let's say we are confident that we will achieve our sales target for this year. We make very good progress in the negotiation of the institutional deals, and the sales activities in the retail business are going as planned due to the fact that we have here clear indicators. Before we sign the notary deed, we have pre-reservations, then we have reservations. In this process, we clearly see that we will get to our numbers this year. Of course, for the institutional business, we have to sign these deals. We have not only one candidate in the process for each project. Therefore, we are confident. Of course, there is always a remaining risk. We do not see here, for us, currently the situation that we get under EUR 500 million. Okay. Perfect. Yeah. I mean, it is totally clear. I mean, I kind of thought that as higher the retail sales, as lower the risk in the instant deals. If the retail segment remains that strong, it might lower the pressure on the individual institutional deals. Something very. What I would like to add here is also that at the beginning of this year, the overall sentiment for institutional sales was much better, you remember. What makes us. Positive going forward is that the buy-to-let investor space has improved much better. We have been positive on that. Now we know that this group, this business could be significantly higher. It is also the reason why we are still able to get to the EUR 500 million target, despite the institutional market was weaker than initially forecasted. I think what helps us going forward is if the buy-to-let business is strong and we can generate here more when the institutional market is coming back. On the broader basis, this will quite be better than what we maybe have initially hoped, let's say, 12 months ago. We are here on this, let's say, overall situation quite positive. We will try to push further the buy-to-let market. Of course, we do not forget the institutional business. This is always an important pillar. It is good to see that the buy-to-let investor space is performing better than we initially thought it would perform. Yes. Yes. Of course. Maybe one general question, looking at the different projects or different segments, retail segment and institutional segment. Could you kind of easily switch projects which might be initially thought marketing for institutionals to the retail segment as kind of maybe the institutional market remains subdued for a couple of times and the retail appetite still increases? Could you just easily switch those projects from one pillar towards the other one? Yeah. To be very clear, yes. I would say the mix of living space is similar, I would say, between buy-to-let and institutional business. It would be a big difference if you would try to switch from owner-occupier to institutional. For what we are planning, all the projects we are currently preparing fit to the depreciation scheme. This means that we can easily switch from buy-to-let to institutional sales. Okay. Perfect. That means that also, yeah, projects for the Instone business are kind of designed for the special depreciation scheme. When you switch it, it's okay. Perfect. Yeah. Makes sense. Thanks a lot from my side. Very helpful. Yeah. Welcome. As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question comes from the line of Manuel Martin from ODDO. Please go ahead. Thank you, gentlemen. Two or three questions from my side, please. In terms of acquisitions where you have become significantly more active, could you elaborate a bit on the total firepower that Instone might have. In terms of purchase price and maybe GDV and, of course, connected to that, how much LTC would you allow Instone to have in the acquisition activities? Yes. Thank you, Manuel. This is David speaking. So we think that we will acquire, as mentioned, around EUR 2 billion GDV until end of 2026, which translates into EUR 300 million sort of value in terms of land plot, of which the financing, just approximately, to give you an idea, is estimated to be around 50%. So leaving around EUR 150 million, which you could see as cash outflow if we would do all the deals by ourselves and if we would not have partners with us. As we are looking for partners, this will be even reduced. Now, we have currently EUR 220 million of cash available. We have on top EUR 140 million of RCF. North of EUR 300 million. We are currently also looking at raising additional corporate debt to fill up our firepower. We have ample room to actually grow above the EUR 2 billion just mentioned and scale our business accordingly. Okay. Okay. And the LTC is. Sorry. Yes. LTC, that's a good question. We are currently at the 14%, as you have seen. That will go up. I think you can assume that. We will not cross sort of the 40% line. That is sort of where we want to be, ideally in the 30-40% area. Okay. I understand. And a more general question. When it comes to— Sorry, I forgot one. The acquisitions. Do you have a kind of target of IRR that you have in mind for the acquisitions? Yes. We are generally looking internally when we do our approvals at IRRs, which are north of 20%. Okay. A more general question, final one. It's on politicians and the famous Balturbo. What's your opinion or what do you think about the discussions around Balturbo? What could happen and how could this influence you and the sector in general? Maybe you have an idea on that. I think overall, the Balturbo, of course, the German government is shifting responsibility for accelerating approval process to local authorities. I think this could be positive in the one or the other metropolitan area. Currently, we are having a few projects in Düsseldorf, for example, and the city is thinking of where to really implement this process where they don't need a master planning. The one or the other city is really thinking of how to fasten building permit or master planning processes. Again, I think it depends on the will of the local authorities to use the tools. Therefore, it will be, I would say, a mixed picture. You will have regions where this could be positive for us and regions where it does not really change the situation. This is my view on the Balturbo. Yeah, it will help in some places, but I think it is not the main game changer. Understood. Okay. Thank you very much. You are welcome. Ladies and gentlemen, that was the last question. I would now like to turn the conference back to Burkhard Sawatzki for any closing remarks. Thank you for your participation. If you need further information, please do not hesitate to contact the Instone IRR team. Thank you. Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.