Ladies and gentlemen, welcome to the conference call of Peach Property. At our customer's request, this conference will be recorded. As a reminder, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions. If any participant has difficulties hearing the conference, please press star followed by zero on your telephone for operator assistance. May I now hand you over to Stefan Feller, who will start this conference. Please go ahead. Thank you, Sara, and good morning from Zurich. Welcome to the results call of the first half year 2022 of Peach Property Group, and thank you for your participation. We have our CEO, Thomas Wolfensberger, and our CFO, Thorsten Arsan, in the call today. I hope you had the chance to download our presentation. Otherwise, you can find the document as well as our semi-annual report within the publication section on our website. Thomas Wolfensberger will start with an update on our business in the first six months 2022, whereas Thorsten Arsan will elaborate on our financial numbers. At the end, we are happy to answer your questions. Now, let me hand over to you, Thomas. Thank you, Stefan. I'm happy to welcome everybody to our results call of the first half year in 2022, and thank you for your interest in Peach Property. We continue to prove ourselves as a reliable player in the residential real estate market during the first half year of 2022. Operationally, we improved on many of our key performance indicators. We achieved a new letting record in the newly concluded rental contracts, while we further delivered on a refurbishment program. In tenant service delivery, we made further progress by reducing the reaction time for tenant matters. In the first half of this year, we also successfully integrated the 4,300 units acquired at the end of the previous period into our proprietary management platform. We concluded approximately 1,800 new rental contracts during the first half year, setting a new record. Letting success has noticeably influenced the vacancy rate, which was reduced from 8.0% as of December 31, 2021 to 7.6% as of the end of June 2022. Not only were we able to step up our letting frequency, but we let our apartments at increased rental levels. The average rent per square meter from new rental contracts came out at more than 15% above the average rent as of the end of 2021. We furthermore concluded rent adjustments for approximately 5,000 units of sitting tenants during the reporting periods. Rental income increased by 3.4% on a like-for-like basis in the periods. The full impact of rent increases concluding during the first half of 2022 will be realized during the second half. On the back of these operational measures and the acquisition at the end of the previous period, rental income increased by 18% year-on-year to CHF 59.3 million. The total market value of our portfolio is approximately CHF 2.64 billion. The EPRA NTA of CHF 69.5 per share increased from 68.56 at year-end 2021, despite substantial weakening of the euro against the Swiss franc. The increase is attributable to valuation gains in the existing portfolio of approximately 3%, as well as the operational progress, which can be seen in our FFO I increasing by 93% to CHF 9 million at the end of H1 2022. The operating results decreased to CHF 104.3 million for the first half of 2022, compared to CHF 151.7 million in the comparative period. The operating results for the comparative period includes an initial valuation gain of CHF 63.8 million that stemmed from the acquisition at the end of June last year. Excluding this impact, our operating results increased year-over-year by approximately 20%, with the main drivers being the operating results generated from acquired properties at the end of the previous period and further operational progress made during the reporting period. We further improved our financing structure. The LTV improved from 51.9%- 51.7% at year-end 2021 to the end of the reporting period. The interest coverage increased from 1.38 in the previous period to 1.53 in the current period. We also set a new record in refurbishment with 1,400 units refurbished in the reporting period. Approximately 15% of the refurbished units underwent energy-related renovations, which not only reduces our ecological footprint, but also benefits our tenants, considering the recent developments in energy markets. In the interest of our tenants and the environment, respectively, we will continue to prioritize a significant reduction in the carbon footprint to our properties. Slide five. Let me share with you a few thoughts on the capital markets. After several years of no or very low inflation, we've entered a new era of massively higher inflation rates. Investors seek protection. We think residential real estate can offer just that. Historically, in Germany, rents and consumer prices have been moving almost completely in line. We see no reason why this should not be the case in the future, and expect that market rents will accelerate significantly in the coming years on the back of this new inflationary environment. Peach has a track record of approximately 4% like for like rental growth in the last years, and we see a lot of organic potential in our portfolio to continue or even accelerate this growth path in the future. Another important topic is the sustainability of asset valuations. At Peach, we had another period with valuation gains of approximately 3%. Our valuation of EUR 1,490 per square meter is still at very modest levels compared to the peer group. Against the backdrop of a further increasing supply-demand imbalance on the German residential market, in particular, when it comes to affordable housing, we believe that valuations show further potential. Even more so when we look at construction cost development and the implied rent level. In particular, in a difficult economic environment, people will look to optimize their cost of living. In such a case, an apartment of Peach is in many cases the most affordable option available. A final interesting item is debt refinancing, especially now, given that yields in the bond markets have made bond issuances less attractive. We have very successfully worked towards refinancing our February 2023 bond maturity with instruments that offer significantly better terms than the bond markets. Just a few days ago, we signed a new secured loan agreement of approximately EUR 100 million. Combined with our EUR 100 million revolving credit facility, which we closed in April this year, the upcoming maturity of the 2023 bond is covered. As the outstanding amount had previously been reduced by two buyback initiatives to EUR 181 million. In order to prepare ourselves for further opportunities, we are working on new financing arrangements. Slide seven shows the most important KPIs of our investment properties. Given there were no significant acquisitions in the last 12 months, the size of the portfolio is largely unchanged. In the first half of the year, we were engaged in the active management of our portfolio, and in particular, integrated the 4,300 units acquired at the end of the previous period to our in-house administration. This has already shown some positive impact on our vacancy rate, coming down to 7.6% after 8.0% at the end of last year. Despite a valuation gain of 3%, the portfolio value in Swiss francs is almost unchanged given the further weakening of the euro against the Swiss franc. Our portfolio has an attractive gross yield of 4.6%, just slightly below the 4.8% at the end of 2021. Let's move on to slide number eight, and let me elaborate a bit on why we think we will see increasing market rents going forward. As already mentioned, historically, rents in Germany increased very much in line with German consumer price index, and we think it's very reasonable to assume that this will continue. As you know, in most cities in Germany, the Mietspiegel, the Benchmark rent, is revised every two to three years and reflects the concluded rents during the last six years for various categories of apartments. We had a look at recent Mietspiegel adjustments in some of our important locations. As you can see on the left chart, the upward adjustment was quite substantial in most cases. These adjustments were made before the rise in inflation. Therefore, it's very likely that the inflationary environment, if persistent, will accelerate market rents further. Therefore, rental growth offers inflation protection. Slide 9. How did rents evolve at Peach in the first six months of 2022? This can be found here. The chart on the left shows that we were able to lock in or even slightly exceed once more the market rent levels when concluding new letting contract levels. New lettings were done on average at rent levels approximately 18% above the in-place rent levels at the end of December 2021. At the same time also, rents increased. Our gap to the market rents, and therefore an important source for further rental growth, is still approximately 18%. As we expect market rent growth to accelerate significantly on the back of inflation, this additionally contributes to our future rent growth potential. On a like-for-like basis, we achieved growth of 3.4% in the first six months. However, as the effect of rent adjustments and new letting contracts concluding during this period will be only realized fully in the second half of the year, the growth rate is likely to come in a bit higher on a full year basis. On slide 10, you can see why we think there is a supply-demand imbalance in the German real estate market in residential, in particular in the affordable housing segment. As you know, the government targets to build 400,000 new apartments every year, and this goal has constantly been missed in the last years. Driven by now skyrocketing construction costs, we see project delays. Even building permits for new apartments decreased in H1 2022 by 2% year-on-year. At the same time, we see increasing immigration also driven by the influx of refugees from Ukraine and a deteriorating socio-economic environment, which will lead to more demand for affordable housing. While studies estimate costs for new construction in the area of about EUR 4,000 per sqm, which would imply rents well above EUR 10 per sqm, the Peach portfolio is valued at EUR 1,490 per sqm and our average in-place rent is EUR 5.87 per sqm a month. This shows that new construction cannot address the undersupply of affordable housing. With that, we come to slide 11 and our valuation result in H1 2022. As of June 30th, 2022, our portfolio generated another revaluation gain of approximately 3%. In absolute numbers, this is below the result in the same period last year, which was driven by the initial valuation of the acquired portfolio. Nevertheless, the result is very solid. It's a very solid outcome and reflects the persistent high demand for affordable housing. Our external valuer, risk partner, as well as other market participants, expect a solid further development of the German residential market in the second half of this year. The market is very much intact, and we feel with our current valuation level and the rent multiple of approximately 21x, very comfortable also comparing with our peer group. Slide 12 gives you an impression why we still feel very comfortable with our focus on B and C cities. The location shows historically stable rent growth, but a significantly lower market rent multiplier than in A cities. That was always an important factor when we had selected our locations, the affordability of rents is much healthier than in most German and international A cities. In a typical Peach location, and that we show in the upper chart on slide 12, people spend no more than 30% of income on rent. Much less than 30, mostly. We think this measure is even more important these days as the cost of living in general and the energy costs are increasing significantly. With that, we move to slide 13. Energy prices drive up the cost for heating. The cost of gas for heating for our tenants was so far significantly below market as we had locked in prices through hedges a few years ago. However, the new gas price levy in Germany, the Gasumlage, will also hit fixed price contracts. In order to flatten the additional cost burden for our tenants, we will increase the monthly payments for ancillary costs in Q4. We expect that the increase will be approximately EUR 30 per month for tenants or approximately 7% of the total rent costs. There will be state support to absorb the additional costs. Far, at least EUR 300, more for low-income households. Further support is being discussed these days, so we think the increase should be manageable by our tenants. Slide 14. In this difficult situation, we further assist our tenants with personal support. This demonstrates again the added value of our local presence in our Peach Points. As you can see on slide 14, we have opened another four Peach Points at the beginning of 2022, which brings the total number to 15. Besides our physical presence, we offer our tenants also 24/7 digital channels to get in touch with us. Let's move on to slide 15. The scalability and efficiency of our platform with our ticketing system has been demonstrated once again. In the first half of 2022, we integrated the 4,300 units acquired at the end of the previous period into our in-house system. This resulted in a significant increase of handled tenant tickets during the reporting period. At the same time, we were able to keep our so-called one touch rate constant, meaning that 90% of the queries could be solved within the first interaction. Also, we made further progress to finally resolve issues, including our external systems partner. We reduced the time needed to 3.1 days from 4.4 days last year. Having in the meantime almost our full portfolio integrated into our own platform, this paid out also when it comes to vacancy reduction. On slide 16, you can find our vacancy numbers. Overall, we achieved a reduction of 0.4% in the first six months of 2022. This was driven by a record number of new lettings in the first half. Despite the challenging environment in the last few months, with rising material and labor prices and the lack of material and workforce, we renovated 1,400 units in the first half year. This is a new record for Peach. For the whole year, we're planning to renovate 2,500-3,000 units. Renovations are an important instrument to further reduce vacancy in the coming years. Of our total vacancy, about 476 units are currently in renovation. For about 830 units, our construction teams are currently in evaluation and planning renovation measures. Once the renovation of these apartments has been concluded, we should achieve a vacancy rate in the area of below 4%, which we see as the normal rate for our portfolio. From today's perspective, we expect that we can reach this target in approximately three years' time. Let me conclude my part here with a few words on our remaining development project in Switzerland, the Peninsula project in Wädenswil on slide 17. We made significant further progress here. As you can see on the first picture, the excavators are up, and the construction has started recently. In the meantime, we have notarized the first contracts for approximately EUR 40 million or 26% of the wholesale volume. We have reservations for an additional 30%. We expect the conclusion of the Peninsula project by the end of 2024. With that, I come to the end of my part and would like to hand over to Thorsten Arsan, our CFO. Thank you, Thomas, and also a warm welcome from my side. In the next minutes, I will provide an update on our financial performance in the first six months of the financial year 2022, an update on ESG, and will conclude with our guidance for the full year 2022. As the capital market is currently very much focused on our refinancing of the upcoming bond maturity, let me start with a few words on our current financing KPIs on page 19. As you can see, our debt profile has no maturities left in 2022, and the upcoming bond maturity in February 2023 has been reduced by two buyback transactions to EUR 181 million from initially EUR 250 million. With various refinancing measures undertaken in the first six months of this year, we managed to improve all our financing KPIs. ICIs up from 1.38 to 1.53. Weighted average cost of debt down from 2.7%- 2.47%. Weighted average maturity up from 3.7 years to 3.8 years, and the LTV is down from 51.9%-5 1.7%. With unencumbered assets of approximately EUR 670 million as per end of June, we see a lot of opportunities in the secured financing market, where we still find decent appetite from lenders at acceptable cost. Therefore, we are working on various additional financing projects. One of it, a new secured loan with a volume of EUR 100 million, has been signed last week. Combined with the available revolving credit facility, which has a volume of EUR 100 million and available cash, the bond maturity is basically covered. Nevertheless, we continue to analyze potential additional refinancing opportunities to further improve our capital structure in the upcoming months. Let's continue with an overview of the development of our main KPIs on page 20. Our net rental income increased by 18% to CHF 59.3 million in the first half year, 2022, compared to CHF 50.2 million in the same period, 2021. The increase is mainly driven by the acquisition of around 4,300 units, which closed mid last year. In addition, we made a substantial operational progress in the reporting period, reflected in higher adjusted EBITDA and FFO I. Our adjusted EBITDA, which excludes the valuation result, increased by 9% from CHF 27 million in the first six months, 2021, to CHF 29.6 million in the current reporting period. Our FFO I almost doubled in the first half year, 2022, compared to the same period last year and achieved CHF 9 million. In absolute numbers, the operating income decreased to CHF 138.1 million from CHF 170 million in the same period last time. However, the result last year contained an initial valuation gain of around CHF 64 million from the acquisition in June 2021. Adjusted for this effect, the operating income increased approximately by 20% year on year. The effect of the initial valuation last year is to be taken into account also when comparing the after-tax result, which is CHF 47 million in the reporting period. We further improved our equity ratio from 40.1% end of last year to 40.6% at the end of June, and our EPRA NTA, which improved to CHF 69.50 per share from CHF 68.56 end of last year. Both results were achieved despite a further weakening of the euro, which had an overall negative effect of approximately CHF 38 million on the equity and NTA positions. FX adjusted, calculating with the conversion rate of euro to Swiss francs of 1.0, i.e. parity exchange rate instead of 1.03. The NTA per share as of December 31st, 2021 would have been CHF 66.56. The increase in the first half year of 2022 would have been approximately 4.5%. On page 21, you can find our CapEx development. As we announced at the beginning of the year, we plan in the current financial year, the largest renovation program in Peach's history. Accordingly, the CapEx in absolute numbers and per square meter increased significantly compared to the same period last year. We spent CHF 20 million or approximately CHF 32 per sqm and renovated 1,400 units. At the beginning of the year, we guided for our total CapEx in the financial year 2022 of approximately CHF 70 million. Due to lack of material and workforce supply, we think from today's perspective, a number in the area of EUR 50-60 million seems to be more realistic. Nevertheless, we still aim to renovate approximately 2,500-3,000 units in the full year 2022. Let me talk also about our OpEx development, which you can find on slide 22. We were able to reduce administrative expenses per square meter from round about CHF 5 -CHF 4.30 in the year-on-year comparison. This reflects the efficiency and scalability of our platform. On the other hand, we experienced an increase of the maintenance costs per square meter to around CHF 9.50 versus CHF 8.80 in the same period last year. This is mainly driven by two catch-up effects. During the pandemic, many people did not want to let people enter their apartment, which means that maintenance measures have been postponed and were implemented only after the restrictions have been lifted in Q2 of this year. Secondly, after we integrated the portfolio acquired last year into our in-house administration processes, we noticed an increase of tenant requests and issues which have not been adequately handled by the third-party administrator and/or the former owner of the assets. We see both as rather one-off effects and expect this to normalize in the coming periods, which should have a positive impact on our margins as well. Let's move on to a short update on our efforts in the ESG area. We have to mention, and now I'm on slide 24, that we formalized our internal ESG governance structure with the setup of a sustainability committee. The committee is chaired by me as the CFO and reports in certain aspects directly to the board of directors. Further, we have initiated the rating process with a leading ESG rating agency. We expect the rating, the first ESG rating of Peach, to be published during Q4 2022. We further worked on the implementation of our decarbonization path, which you can see on slide 25. As announced at the beginning of the year, we are committed to climate neutrality of our real estate portfolio by 2050. As an intermediate goal, we aim to reduce the CO2 intensity of our portfolio to well below 30 kg CO2 per square meter by 2030. At the current state of knowledge, we expect investments of approximately EUR 300 million-EUR 350 million until 2050 to realize this path. This estimate is before subsidy measures or modernization charges. Accordingly, the cost to be borne by Peach will be lower, but it's difficult to assess how the subsidies will develop in the next few years. Also, the current challenging environment in the construction area leads to great uncertainties in the current cost estimates. We will constantly update and refine our estimates going forward on the back of new findings and implemented projects. Additional costs could come from the CO2 levy in Germany. Based on current discussions, we expect the cost of Peach to be not material. Let's move to the next page. Page 27 shows our guidance for the financial year 2022. After the first six months, we feel comfortable with the numbers mentioned and confirm a net rental income of between CHF 130 million and CHF 170 million, based on assumption of an average FX rate EUR-CHF of 1.00. This would result in a like-for-like rental growth of at least 3.5%. For FFO I, we expect the range between CHF 80 million and CHF 121 million, of which we again target to pay out 50% as dividend. Let's move to page 28 for our financial policy. We still aim for the investment-grade rating over the next few years. It's clear that in particular, the targets to lower the weighted average cost of debt to below 2% has become much more challenging in the current environment. On the other hand, we are quite close already to reach our midterm LTV target of max 50%. We will await the further development in the second half of this year to see whether an adjustment of some of the targets is needed. With that, back to you, Thomas, for the conclusion of our presentation. Thank you very much, Thorsten. Let me conclude with slide 29 on the following points. Peach has a track record of like-for-like growth of approximately 4% per year. This potential is very likely to go up if high inflation persists. We have very good inflation protection. Compared to our peers, our portfolio is undervalued very attractively. Given the growing imbalance between demand and supply in the affordable housing segment, it's quite likely that prices as well as rents will further grow in the next years. We have demonstrated also in the last few months that we have access to new financing at good terms, even if the bond markets are out of the question right now for us. With the currently available financing instruments, the upcoming bond maturity of February 2023 is covered. In a nutshell, with an investment in Peach Property, you get a operationally and financially very sound business with a lot of further growth potential at a very deep discount to the EPRA NTA. Actually, the discount is larger than what we've seen in the 2008 financial crisis or the early days of the COVID pandemic. We are very excited about this opportunity. Thank you very much. Sarah, back to you for the Q&A. Thank you. We will now begin our question and answer session. If you have a question for our speakers, please dial zero one on your telephone keypad to enter the queue. Once your name has been announced, you can ask a question. If you find your question is answered before it is your turn to speak, you can dial zero two to cancel your question. If you're using speaker equipment today, please lift the handset before making your selection. Once again, it is zero one on your telephone keypad to register for a question. One moment, please, while we register any questions. Our first question comes from the line of Alexander Klinkmann from Mont Blanc Capital Management. Please go ahead. Your line is now open. Yes, hello. I have just a question about the stock price development. If you compare to other real estate companies, this price is very depressed. I want to ask if there is a reason for that, because at the moment it's completely undervalued, but the stock price seems to fall further and further. Is this only because of fears of rising interest in the Eurozone? How do you hedge against this rising interest rates? Hi, thank you for the question. You know, we are a bit puzzled with the development of the share price ourselves because, as we have, I think, laid out, the operational performance has been extremely good in the first six months. Also, I think, you know, the work we have put into, you know, improving our balance sheets and the financing arrangements has been very successful. We don't see a lot of reason for the share price to be at the level where it is. It's hard to attribute it, but I think probably interest rate fears have a lot to do with it. Yeah. I mean, I would fully agree here. I mean, you see that operational-wise, we have a good first half year, and we even managed to reduce the weighted average cost of debt. It somehow links to the fear that the interest rates in the Eurozone could further go up. I mean, you mentioned the share price development. If you compare our share price development with our German peers, which I think is a more fair approach, we are in line with our peers. It doesn't make it better. Overall, yes, I think it's highly linked, as you mentioned, by the fear that the interest rates could go further up. Do you have some measurement to hedge the position, the interest, or how do you do that? I mean, our kind of somehow natural hedges that we can increase the rent. Basically, as you can see, we have a like for like target of 3.5%, i.e., we can increase our income basis. We've done refinancing measures. As just mentioned, we reduced our weighted average cost of debt. We are working on. We are improving our EBITDA as well as our FFO. I mean, that's what we can do. We can manage the company, we can improve on the operation, also on the financial side. The rest is something we can't impact. Yeah, you have the possibility to make swaps, interest rate swaps. This is also a possibility to hedge the rising interest rates. A lot of Swiss I mean, our Property companies do that. Yeah, I mean, whenever we do financing, it's of course hedged. There is no interest rate risk. For example, we've done some refinancing measures in the first half year. For example, a secured loan with 10-year maturity. This is fully hedged. There is no interest rate risk for that respective loan. Of course, for upcoming financings in two, three or four years, there is a certain risk. For financings that we've closed over the last 12 months, there are no interest rate risks. They are fully hedged. As you can see on page 19, our weighted average cost or our weighted average maturity is around four years, and we have a hedging rate which is above 90%. Oh, that's good. Yeah. There are no open interest. Yeah. Well, because I saw that a lot of analysts have very high price targets for Peach Property around EUR 66, EUR 60, EUR 70. The price at the moment is very low. It's half of it. Less than half of it. Yes, absolutely. How do you protect against takeovers? Because at these levels, with these low PEs, you could be easy a target for a takeover. Obviously, we know that, and there are certain procedures in place in case, you know, we receive an offer, and the board knows how to react in this situation. Right now, I would say that, you know, we have with the weighted average maturity of almost four years and actually, the more interesting fact is that, you know, nobody can hedge interest rates forever. Everybody has a, you know, some years left in their weighted average maturity, you know, in which they locked in the low interest rates of the past. What's extremely interesting in our case, I think, and it you know, takes a little bit more analysis, but the protection you get of the mechanism whereby, you know, the Mietspiegel, which is our benchmark rent, increases with inflation. The way we can increase our rents according to the Mietspiegel gives you know, almost perfect inflation protection in the future. This is something that is sort of not so visible right now because we are still looking at the like for like growth in a low inflation environment. Whatever we show, 3.6%, for the half year, you know, with inflation currently peaking in the Eurozone at maybe 9%. This is a transitional period, and you will see if inflation persists, you will see these rent levels go up in the next few years, protecting us almost completely for this inflationary period. Mm-hmm. Okay. Thank you. Thank you. Thank you. Our next question comes from the line of Stefan Schäfer from SRC Research. Please go ahead. Your line is open. Good morning, gentlemen. Stefan here from SRC. My first question is about your net rental income. It was CHF 59 million in the first half of the year, and your full year guidance is CHF 113 million-CHF 118 million. This seems a bit cautious or very conservative to me as you have 1,800 new rentals in the first half of the year. You explained the potential for further growth of rent on slide nine with 18% potential. That will not all come in the second half of the year, but all in all, having in mind the good number from first half of the year, the guidance seems a bit conservative to me. Yeah. Thank you, Stefan, for your question. I think it's a very valid one. I mean, you have to bear in mind for the first six months, we have a rental income of CHF 59.3 million, roughly. If you would multiply this by 2, of course, you could argue the guidance could be adjusted. But please bear in mind, in the first half year, we had an exchange rate of 1.03, and towards the end we will have a parity. So it will be 1.00. Because our intention is to switch the presentation currently from Swiss francs to euro. Mm. I need the EUR 59.3 million, you need to basically divide by 1.03 and then multiply by two. Yes, maybe we outperformed the guidance, but for the time being we feel comfortable with our existing guidance. Yeah. Still, of course, we'll always try to outperform. Okay, I see. It's a currency topic more or less. Yeah. Okay. My second question is about the renovations. You made 1,400 renovations in the first half of the year, and you plan more or less the same or 1,100 to 1,600 for the second half of the year. We have the inflation topic in all newspapers, in all media. Does this also mean higher prices for renovation and for all construction items for you, and what is your experience here? I mean, there will be maybe a slight increase. I mean, if renovation in this context means basically more fluctuation renovation. Someone moves out, we need to spend EUR 5,000, EUR 10,000 per unit to relet it. This is basically something where you don't do the heavy lifting. There's, you know, hardly any steel, hardly any concrete, hardly any wood. The high inflation that you have for, let's say, new construction doesn't affect us in that sense. We are basically fine. We have fixed contracts with our main, let's say, craftsmen organization. For the time being, we don't see a massive increase of construction costs. So- Fluctuation modernization program. Okay. It can only come from higher wages. If your craftsmen companies have higher wages and ask you to pay higher prices, then okay. The next question is. That's something that might come up next year. Yeah. You absolutely right. The next question is about the Wädenswil project. You started the project in the second quarter, and what income from development property can we expect here to come to your P&L for the second half of the year? In terms of revenue recognition, it's a bit too early for this project because we will recognize the revenue on the transfer of ownership of the units. What's exciting about this project is that, you know, we're now, you know, in full swing in construction, and the sales are going ahead really nicely, with over CHF 40 million notarized. Actually we're already including the reservations. We are already at something like 50% of the project, which I think is a very, very good sign. I'm happy to be in the market with something like this in Switzerland and not in Germany, by the way, right now because Okay. The market here for this type of product is quite a bit better than in Germany. Okay. For looking at your financial result and your plans here, you plan the early repayment of the bond, next year's bond. Is there a penalty if you have an early repayment? No, basically, we could rebuy at par from November onwards. The maturity is 15th of February 2023, but there's basically a 3-month par call so that we could basically repay at par from November onwards. We don't have to, but we can. Okay, I see. A very general question is about transactions. The last big transaction was in the midst of last year, if I remember right. Shall we expect some bigger transactions to grow your portfolio for the second half of the year? How do you judge the current market multiples for resi in Germany for the B and C cities, and what's your impression here from the market? We are constantly analyzing the market for opportunities, and we are getting, you know, trying to position ourselves for further growth opportunities. Right now, it would be premature to say that we've identified something that we can expect to execute in the second half. We see there are, I think, more portfolios coming to the market. We haven't actually identified something that, you know, comes at a price that's attractive enough for us to execute right now. Of course, we continue to monitor the situation. If you get some new offers, you feel or you see there might be a pressure on the multiples at the moment? We haven't seen that yet at all, actually. Yeah, no. Okay. Thank you. Thank you. Thank you. Our next question comes from a line of Philipp Häßler from Warburg Research. Please go ahead. Yeah, thanks a lot for taking my question, and congratulations to this outstanding first half result. Just a couple of follow-up questions as Stefan took some of the interesting ones already. Regarding an acquisition or even more disposals as like all the other bigger competitors in Germany stated already that they will be net seller in this year. Do you have any also same plans on dispose some of your investment properties? That would be my first question. No, we're not, you know, let's say not in a meaningful way. We feel very comfortable with our portfolio. We constantly test the market for opportunities to buy and sell, actually. Right now would be premature. You've seen our presentation and, you know, our, let's say our capital structure. There's no need. Yes. for a larger disposition. Okay, perfect. The second one was on the capital allocation. Like, a good EUR 40 million cash on balance sheet, might be some smaller disposals regarding second half of the year. Any kind of, yeah, indications of a share buyback, for example, is in the cards given the decent discount to NAV? Yeah. We have no plan to do that right now, but I admit that it looks like a very interesting proposition. Yeah. Okay. Okay, that's good. You also mentioned during the call that you lowered your CapEx guidance due to material shortages and workforce supply. Is there any kind of major implications for further reduction in the vacancy rate during the second half of the year and also due to the CO2 emission of the entire portfolio, speaking of the planned split of CO2 cost starting at the beginning of next year? Yeah. Yeah. Thank you for that one. I mean, it's a model. The reduction of our CapEx plan from 17 to something which is between 50 and 60. We don't see that this should have a negative impact on the vacancy rates. The second one you mentioned, the ESG, the CO₂ issue. I mean, those, let's say, measures that we basically skipped due to dimensions reasons, they wouldn't have been mainly or most of them wouldn't have been ESG related. We are basically analyzing our total portfolio with external support where we can basically, yeah, get the biggest impact on ESG, i.e., where do we have the properties with the, let's say, the most deficit in terms of ESG, and that's something where we're currently in the process, and we would basically tackle those properties for ESG-related refurbishments in the next two years, i.e., the reduction that we have for the time being has no impact on our ESG path. Okay, perfect. Clearly answered. My last one is on the cost side. Like, yeah, infrastructure pressure is kind of high. Are there any pressure from the cost side, i.e., staff cost, inflation for the second half of the year? No, I mean, labor costs are, let's say within Peach, we basically reassess the labor costs annually, usually by the end of the year for the coming year. For this year, there is basically certainty there will be no cost increase for the next year. I mean, we need to see. Of course, there is a kind of expectation, but we are optimistic that this is, let's say, if we see it overall in combination with our like for like rental growth, with the other opportunities that we have, that we can continue our path to further improve the FFO, which is our top priority. Okay, perfect. Fully understood. Thanks a lot for the answers. Very helpful. Thank you. Our next question comes from the line of Roland Leutwiler from Roland Leutwiler Consulting. Please go ahead. Your line is now open for your question. Good morning, gentlemen. Congrats to your half yearly results. The stock market seems to think that the financial results are only half of the story. If the discount to NTA goes from 20%- 60%, I wonder whether the market does not trust the valuation model of your portfolio. I have four questions. When do your biggest fixed rate loans come up for renewal? Please forgive me if I missed that information in one of your slides. Would you like to elaborate on the f- Yeah. On that before I go on? Yeah, yeah. Definitely, I can do so. If you on page 19, there's basically the bond that we've mentioned, which is already refinanced, the 2023 bonds. Mm-hmm. Let's say, the next upcoming maturities are in 2025. This is another EUR 300 million euro bond and the larger secured financing. Okay. The last one you said? It's in 2025. It's an unsecured corporate bond with EUR 300 million as well as a secured loan. Together, this is EUR 600 million, as you can see on page 19. Okay, good. How come that the NAV of the portfolio or NTA has increased again despite rising market rates? What does that- This is, uh, as we- In your modeling, there must be something that makes it rise, and it seems that the rising market rates had no impact. That's why it went up again, right? Well. How is that? How come? The increase or the improvement of NTA is basically driven, first of all, by the FFO that we managed with EUR 9 million. Secondly, which is the bigger driver, the valuation results, i.e., the 3% EUR 77 million. The EUR 77 million is basically a result or functionality of that, the value of our portfolio is EUR 77 million higher than at the beginning of the year, which is mainly driven by the positive letting result that we've managed to achieve in the first six months. I.e., letting more than 1,800 rent contracts on average 18% higher than the in-place rent. Of course, this is one major driver of the valuation. Let's say the valuation conducted by Wüest Partner is completely delinked from the share price development. It has nothing to do with each other. Obviously, the stock market might have a different opinion than the valuers. Let's say even within the first half year, the valuation result was, as said, 3% positive, driven by the rent development, and also that we still have this demand-supply overhang, that there's significant demand for affordable housing in Germany which can't be fulfilled. Okay. That means that, let's say, just hypothetically, if average interest rates in the market were to go up from, say, 2.5%- 5%, your valuation model would still show a higher NTA if those other parameters were to continue to rise. You would not adjust the portfolio value according to the interest rate environment at all because it does not play a role in your valuation. Is this correct? It is delinked. I mean, the valuation result is delinked from the interest rate development. There are various factors which are relevant for the valuation. Let's say the rent level for new rents, also what is the market rent doing. Inflation also has an impact on the rent level as well as on the cost side. Then, of course, at the end, the market value needs to be comparable with current transactions in the market. i.e., there is no automatic link between interest rates are rising, our portfolio value needs to go down. I mean, we've all experienced in the first six months of this year that the five-year Euro swap rate went up from 0% or even negative to 2%. What happened to the market value of all residential portfolios in Germany went up, even the interest rates went up as well. There is no direct link. It's one input parameter, but there are also several other input parameters for the valuation. Hi, Roland, Thomas. Maybe I can add from my side. I think it's a very interesting question. You know, valuations are basically the whatever the valuation company observes in the market, right? They look at every single transaction in the market, and they you know that's how they derive the value. It's you know not, let's say, we can maybe derive some economic indicators from a valuation such as a discount rate of these things, but mainly the values are what's observed in the market. My read of this and you know is that when inflation goes up, it has an immediate impact on interest rates, as we have seen. All the national banks in every country, they have moved relatively quickly to raise rates. Obviously, so have the debt markets. That has an immediate impact. Now, inflation impacts also rent levels. This happens with a delay. That's the only main thing I think that's important for us to recognize. Because whereas the increase in rates happens right away, the increase in rent levels happens with a certain delay. We said in the presentation that overall, if you look at it, if you model this for, I say an extended period of time, 10 or 15 or 20 years, you will see that, rent levels will have to go up, if they continue to behave the same way, and there's no reason why to believe otherwise, you will see rents going up, much more in the next years. That is the mechanism that justifies basically the valuations that we see in the market. Because investors who buy these properties know that these properties will increase, you know, the rent levels will increase, thereby passing on the effect of inflation to the tenants almost fully over the next years. That's, I think, what needs to be factored into a model when, you know, trying to model a business like ours. Yeah. I see your point, of course. I'm just saying that what has happened to the discount must be in relation to another measure that you have, that you are not accounting for in your valuation model. That may be one of the reasons, you know. I mean, if you buy a property today for EUR 10 million and you have to finance it at 5% instead of 2.5%, usually the property gets cheaper too for the purchaser and not more expensive for the potential rent increase that you get five years down the road. I think that's the missing link. We should not, you know, make the picture so rosy that we say, "Well, we just don't understand, and people completely misunderstand the market." There is always a reason because the market is right. The market says right now, the properties are probably not rising, but they're falling, and that's why we need to address a discount to NTA. That does not mean the portfolio has worsened. Quite to the contrary. Everything you do and every, you know, number that you have shown today shows that this is a very sound portfolio. You do many, many good things and mostly the right things. You have a relatively conservative financing level. So everything is right, but still, we should understand the market and not just be blindfolded to it. That's why I asked this question, because otherwise we wouldn't have a discount if there's everything factored in, you know. Because Peach has fallen more than most property stocks and definitely more than the market. That does not mean anything has been going down the drain at all. We need to understand where it comes from, and that may be one of the reasons, I think. My last question. Any big investors came aboard or divested in the last couple of months? No. I don't. You know, it's probably fair to say, I mean, obviously, we see, you know, we're able to communicate only those investors that had to file, you know, above 3%. I don't think we have seen, you know, any big movement in the share register at all. Yeah. Thank you very much. Thank you. Our next question comes from the line of Andreas von Arx from Baader Helvea. Please go ahead. Your line is open. Yeah. Good morning, everybody. I also have a couple of questions. I'll take them, theme by theme. I'll start with two operational questions. I noticed an increase in salaries of 18% in the first half versus second half of last year, and the number of employees is up 10%. Could you elaborate on that increase in cost? I mean, increase in cost is mainly driven by the fact that we've increased the portfolio size, i.e., the 4,300 units that we acquired by the mid last year. This is one driver. The second driver is that we basically I mean, the good thing is if you become bigger and bigger, for example, so far, we haven't had a tax department. Everything tax related has been done by external advisors. We are currently, for example, setting up an internal tax department in order, which basically increases the salaries that we have to pay, but on the other hand side, it decreases the external costs that we have to pay. These are the main two drivers. On the operating, other operating expense line, you point to higher IT expenses. I mean, I here noticed that it is now 9.9% of rents. Whereas as that line has been 8% of rents for the full year or 8.2% for the first half. Is that IT expense temporarily only? I mean, the first two questions here relate to the theme of one would expect that your profitability would actually go up with an enlarged portfolio. Whereas if you look at the first half, I think, you know, the costs have been increasing faster than the rents. Well, I didn't get the beginning of the question. The other operating expenses are up. Yeah. As well in the first half. I mean, you point in the half-year report to higher IT expense, when I look through the notes. Yeah. The other operating expense is now 9.9% of rent, whereas it has been 8% of rent for the full year 2021. Relatively, that line has increased quite significantly. Is that temporarily only, and why is the operating leverage not kicking in as seen in salaries and as seen in other operating expense? Yeah. I mean, the other operating expenses, yes, they went up. Mainly, there's a one-off effect that we acquired entities which have been domiciled in the Netherlands, in Norway, and we basically had projects to change the domicile, so basically, to redomicile them to Germany. This had some extraordinary costs, which are basically incorporated in the other operating expenses in the first half year, 2022. Normalized by that, the 8% that you just mentioned should be a number going forward, which should be suitable. The second theme, coming back to what was just previously discussed on the revaluations. I'm basically taking it exactly from the opposite side. First off, can you confirm that your nominal discount rate is actually up half year versus the full year? Has the inflation component been increased? I mean, the real interest rate is down by 22 basis points. Is the nominal interest rate then up? Meaning, as you can see on page 11, the average discount rate applied by Wüest Partner went down from 3.7%- 3.6%. That's the real, right? That's the real interest rate. That's the discount rate Wüest Partner basically applying for calculating the market value. Okay. Now, if I take the decline of 22 basis points and the increase in... You know, a decline in discount rate should lead to higher revaluation. 3.5% rental growth like to like should also lead to higher revaluations, actually around 3.5%. The relatively stable vacancy rate, isn't then the revaluation results shown not a bit less than one would mathematically expect? I mean, if I take the sensitivities, I would get to more like EUR 100 million revaluation gains. I mean, is that lower number a signal that your initial revaluations have been relatively high, and now that the operational progress does not get reflected one to one in higher revaluations again, or is this just, you know, a market-related things? I mean, that's actually a very good question. Usually, we get criticized that the increase or the valuation result is too aggressive. Now, it seems that it could be too conservative. I think it's neither too aggressive nor too conservative. I think it's a fair and a solid one. I mean, we've realized that some of our peers have higher valuation results. That's for sure. I mean, but we are basically comfortable with our result. When you mentioned the vacancy rate went down, we have 3.5% like-for-like growth. I mean, overall, we think our portfolio is appropriate and well assessed or valued. I think it's a solid one, but I also think that we have potential. I mean, overall, the value per sq m is EUR 1,490, and the rent multiplier, 21.2x. Compared with our peers, I think there is a buffer, or there is potential for the second half of this year, and we feel very comfortable with our valuation. As said, I think it's neither too aggressive nor too conservative. Question looking forward for you as the real estate experts. Let's say the inflation would significantly go up, and let's say your like-for-like growth would double, just as an assumption. Let's say from 3.5%- 7%. I mean, what would that do on the revaluations? Would that still, you know, would then be the total 7% be the key indicator? Or would it be the like-for-like rental growth without the inflation that one should take as the main indicator for what could happen on the revaluation side? What's your view on that one? Hi, this is Thomas. You know, valuations are nominal, done on a nominal basis. If inflation drives market rents almost perfectly, and market rents drive you know, the benchmark for us, how we can raise rents, so our rents will be always behind the market rents. You know, in the current scenario, we have a headroom of about 17% to the market rent. If inflation persists, it doesn't even have to go up. Let's say if we have multiple periods now with inflation, you know, in this order of magnitude, it could even be less, you know. Even if you see, let's say, inflation of only 6% for a few periods, you will see that the market rents will have to catch up, because right now they're not, you know, the rebalancing doesn't happen immediately, but they have to catch up to the cumulated, accumulated inflation that happened to all of these periods. In that scenario, you would see market rent levels increasing to a number that, you know, mathematically will be higher than the inflation rate in any of those periods because of the catch-up effect. Then you will see, you know, in all likelihood, our portfolio sort of following, trailing that with a certain delay, right? That's why I'm saying, you know, other companies have modeled this as well, in our sector, to show that, you know, over an extended period of time, there is a, you know, almost perfect hedge against inflation. Yeah. That was a bit the query. I mean, is it the hedge of inflation? Because, you know, I would assume. I mean, I can see the argument that more inflation can equals more market rent. The second part is like, more market rent equals more revaluation. In the revaluation, a higher inflation would also lead to a higher discount rate. The effect might cancel each other out if the inflation just goes up. Do you see a real impact? No, I see. You know, I'm not sure I can comment on the impact in real terms, but I think you know what, whatever inflation rate we'll see in a nominal increase in value and will be overcompensated. Let's say in a time where we had 2% inflation, market rents actually you know went up by the same sort of rate, and this translated into a like-for-like growth of about 4% for us per year, so you know inflation plus 2%. I would also think that going forward, first, I mean, right now we're underperforming the inflation, obviously, because if we have 9% inflation in the Eurozone and our valuation goes up by less than that, then in real terms, you know, we have been sort of lagging the inflation development. You know, as inflation persists and maybe flattens down the road, you have this look-back effect in the Mietspiegel, and this will lead to, you know, theoretically, a time where inflation rates might be flat or come back, but rents will continue to go up to catch up, basically. I think, yeah. I think that's how we have to look at, you know, the way, you know, probably valuation will develop. Again, I have to say that valuations are the result of a valuation company looking at market transactions. All of this is just theory. If you know, if somehow the market behaves differently, this will be reflected in the valuations. Okay. Last, I have a strategy question. I mean, if I understand you correctly, given your comments on disposals and acquisitions, I mean, your strategy has not changed at all in the last six months. Basically you still try to get to that 50% LTV on the financing side. On the other hand, if there would be attractive opportunities, you would still be open for acquisitions. Now, looking at the current valuation levels that you are and looking at the debt levels that you have, I mean, adding a meaningful portfolio without equity issue seems not possible. Is that correct? Secondly, I mean, given the- Yeah, that's. Hmm. Hmm. Yeah. Secondly, given your assets are at 50% discount to the book value, I mean, then it would only make sense to acquire a portfolio if you can get it at 50% to the book value. Because otherwise, you pay the full price, and the market applies a 50% discount to the book value will immediately destroy shareholder value. I think your assessment is quite correct, only that with 50% value, I think the equilibrium would be 25% discount on the portfolio that we would acquire. Mm-hmm. Yeah. Yeah, that's accurate, you know. Let's say that you're right. If we add a portfolio, we have to raise equity. We're not going to do that if the effect of, let's say, the gain on any acquisition doesn't sort of outdo the dilution. That's the one thing I'd like to comment. The second thing is, in our experience, you know, the real estate transaction markets are far from perfectly efficient. You know, situations arise where, you know, the markets don't behave as efficiently as the financial markets. You know, we have been able to sort of create opportunities in very specific situations, and I wouldn't preclude that from happening. In any case, we of course adhere to our financial policy and guidance and we're working towards getting the LTV below 50%. You know, any acquisition would be the second priority after you know delivering on these KPIs. Yep. Very helpful. Thank you very much. Okay. Thank you. Our last question comes from the line of Joanna Minotor from Pictet Asset Management. Please go ahead, your line is now open. Hi. Good morning. Thank you for the presentation and good results. I have a question with regards to the refinancing, as this is for me, the critical point as of now. I could see in your results that you raised a number of new loans and mortgage loans as well. You have undrawn RCF remaining. I would be interested in knowing which sources you will use exactly to refinance this EUR 190 million of debt coming, and at what point exactly you will be calling the debt. Will it be in November or will you be waiting for the next year? Thank you. We can hardly hear you, by the way. I mean, we heard your question, but just if there's a way you can. Yeah. Improve your microphone. Can you hear me better now? Oh. Yeah. Much better. Much better. Okay. Do you want me to repeat it, my question? No, no. No. I think we've understood it. Okay. I mean, as you rightly pointed out, we have existing cash on balance. The second, let's call it ingredient, we have an RCF of EUR 100 million, second ingredient. The third one is EUR 100 million secured loan that we signed last Friday that we can use. These three ingredients can be used to refinance the EUR 181 million. Nevertheless, as mentioned in our speech, we are working on additional refinancing instruments, but with those we mentioned ingredients, we could basically cover the bond repayments. Your second question, I think, was related to the timing. I mean, that's something we can't answer right now, but as mentioned before, I mean, there is the possibility we have the three-month par call structure in the bond, which basically means that we can repay as par from November onwards. I think that's economically very attractive. Without confirming that we actually repay the bond before or after the. At latest by the mid-February. Okay. For the time being, you haven't yet really decided how you will be using those proceeds or how, with which proceeds you will be repaying the bond, right? No. What I said, we have three ingredients, and they will be used. Yeah, I know, but the. To repay the bond. Okay. Yeah. No, wait, I was just thinking that you. Well, definitely. Yeah, sorry. The loan that we signed last week, this will be definitely EUR 100 million. They will be used to repay the bonds at one point in time. Okay. That's for sure. Okay. We can use the RCF existing cash and whatever we do until February. Okay. Thank you. Thank you for your answer. Thank you. You're welcome. Thank you. I now hand back to our speakers for any closing comments. Thank you, Sarah, and thank you all for joining our call today. We are available for your follow-up questions today into next two days. We are also present at a few conferences, in the next few days, so do not hesitate to reach out to us. Please note that our next scheduled reporting event is in March 21, 2023 for the full year 2022 results. With that, I'd like to conclude the call and wish you all a nice day. This now concludes our conference. Thank you for attending. You may now disconnect.