Dear ladies and gentlemen, welcome to the conference call of TAG Immobilien AG regarding the publication of the interim statement Q3 2021. 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 during the conference, please press star key followed by zero on your telephone for operator assistance. I'll now hand you over to Martin Thiel, CFO, who will lead you through this conference. Please go ahead, sir. Yeah, many thanks, and good morning, everyone. This is Martin from TAG. Many thanks for dialing in today's conference call for the third quarter results. We will go through the results quite briefly of the first nine months in the third quarter, and then, of course, discuss our guidance for the financial year 2022 that we have issued today. Let's start on page four of the presentation, which is also available on our website if you want to download it. Page four shows the highlights for the third quarter and the first nine months of 2021. Looking at the operational performance of the German portfolio, vacancy was slightly reduced from 5.8% in the previous quarter to 5.7%. Today, vacancy at the end of October was around 5.6%, so we are at least on a positive track again. In the total portfolio, vacancy was around 6%. That's nearly unchanged to the previous quarter. Like-for-like rental growth, including vacancy reduction at 1.7%, that compares to 1.6% in the previous quarter, and a slight increase in FFO or a more stable FFO, EUR 46 million in the third quarter compared to EUR 45.9 million in the second quarter of 2021. In the EPRA NTA and in the LTV, no big changes. The next major changes, and surely the next positive changes, will happen at the end of financial year 2021, so in the fourth quarter, when we will carry out our second valuation for 2021. Looking at acquisitions and disposals in Germany. So far, we have acquired no new units in 2021. Markets, as discussed in previous call, are simply highly competitive. I mean, what is the good news on the valuation side, that means increasing prices, is then, of course, for the acquisition side, not the best news. I mean, we stay optimistic that we will be able to source new acquisitions also in the future, but it's clear the market is extremely competitive. Looking to disposals, we continued our disposal program for non-core assets, so 343 units disposed. Slight book profit of EUR 400,000, selling multiple above 20x. This is more an ongoing disposal program that we carry out here in Germany now for four years. Coming to page five. Looking at the operational performance in Poland. I think we have definitely good news. Increased revenues from sales in the first nine months of 2021 in comparison to 2020, and also our strongly increased results, operations Poland, that's going directly into the FFO II. This result is today really completely a sales result, and it ended up with EUR 6.1 million compared to EUR 2.5 million in the previous year. Looking at the total pipeline that we have contractually secured. These numbers increased not only in comparison to the previous year, also in comparison to the previous quarter. We're now in the build-to-hold units, a contractually secured pipeline of 8,500 units. The build-to-sell units pipeline comprises 3,600 units. Today, we're publishing our new guidance for 2022. Let us first mention that the guidance for 2021 is unchanged. We keep the FFO guidance at the midpoint at EUR 180 million. This should be definitely good achievable when you look at the results that translate into an FFO per share of EUR 1.23, and a dividend guidance for the financial year 2021, paid in 2022 of EUR 0.92. The new guidance for 2022 shows an increase of 6% in all metrics. In the FFO in absolute terms, the FFO per share, and the dividend per share. The new midpoint, or the midpoint for the new guidance regarding the FFO II 2022 stands at EUR 190 million. We will come back to that a little bit later. Page seven shows the details regarding the income statement. Looking at the total rental growth and comparing the first nine months of 2021 with the first nine months of 2020, we saw an increase of 4%, out of which 1.7% is from total like-for-like rental growth. The remaining 2.3% is coming then from acquisitions that closed in the course of 2020 that are now in full in our P&L in 2021. Slightly reduced net rental income quarter-over-quarter, but this is only caused by higher maintenance costs by EUR 400,000 in the third quarter. Not really a trend. This is always the kind of swing that we have. Looking at the net income from sales, this positive development is mainly coming from the business in Poland. In the first nine months, 2021, the net income from sales in Poland was at EUR 10.5 million, even after the effect from the purchase price allocation, which reduced this result by EUR 3.1 million. Eliminating this non-cash effect from the purchase price allocation, the net income from sales in Poland would be close to EUR 14 million. Besides the fact that we have today just very small income from net actual rent, we today already have, as last year, a quite attractive cash flow from disposals in Poland. Yeah, I already mentioned that a revaluation will be done as always at year-end 2021. We saw a quite strong valuation uplift of 5.2%, in the first half. Looking at first indications that we have from our valuer and that we also have internally, I think you should expect also a quite positive valuation result for the second half, whether this is exactly then in line with the first half or even though perhaps a little bit lower that needs to be seen. For us, it's clear that the positive valuation trend continues also in the second half of 2021. Coming to page eight. We show you the calculation of EBITDA, FFO, and AFFO. In all metrics, we've seen an increase. EBITDA increased by 2% in comparison to the first nine months of 2020. FFO I increased even a little bit higher, about 5%, also coming from higher... Not only coming from the higher EBITDA, but also supported by lower net financial results and slightly lower cash taxes. Also the AFFO improved quite strongly, about EUR 13 million, clearly due to higher FFO. We also used a little bit less CapEx than in the previous year, so therefore, we saw a strong increase in the AFFO. Please be aware that the AFFO and the FFO, and also the EBITDA shown on this page is purely coming still from the German business. Page eight also shows on the bottom right a detailed calculation of the result that is coming from Poland, which is today and still for the largest part, a result from disposals. Page nine shows the balance sheet. That's just worth mentioning that the cash position is still very strong, with EUR 280 million, even after payment of the dividend in May 2021. Page 10 shows the EPRA NDV calculation. The EPRA NDV per share stands now at EUR 23.80, compared to EUR 21.95 at the beginning of the year. That's a 9% increase. If you include the dividend payment in this increase that we've done in May, then the increase stands in total 13%. Please be aware that as in the past, the EPRA NDV does not add back transaction costs. The footnote we gave here, a picture or a calculation how EPRA NDV would develop if we would add back this transaction cost, so mainly real estate transfer tax. In this case, the EPRA NDV, just for illustration purposes, would stand at EUR 27.30. Just for information, in September 2021, we exercised the cleanup call for our convertible bonds 2017, 2022. As of today, this convertible bond has converted, or to be more precise, we have paid back debt in cash. We issued no new shares. Therefore, there's just one convertible bond as of today, outstanding. The convertible bond that we issued last year, which is not in the money. The strike price is here, close to EUR 35. Therefore, in the EPRA NDV calculation as well as in the FFO calculation, you will not find in the future any diluted numbers as long as the convertible bond from last year is not in the money. Page 11 shows the financial structure. LTV stands at 44%, so that's nearly exactly in line with our LTV target of 45%. Flipping to page 13. Here's the overview of our portfolio. The total GDV stands at EUR 6.4 billion, out of which EUR 282 million is coming from the Polish portfolio. On the map on page 13, if that's correct, for the third quarter, you see four locations. After the balance sheet date, perhaps you have seen that in the press release, we have entered a fifth location in Poland, which is Kraków in the south of Poland, with a first small acquisition of 230 units. Other acquisitions in Kraków will follow, so we have been in the meanwhile represented in Poland in five locations. Page 14 shows like-for-like rental growth. As I said, we came out at 1.7% total like-for-like rental growth. Excluding the effects from vacancy reduction, the like-for-like rental growth was even a little bit higher at 1.8%, as we have had on a net number negative basis point effect just by 10 basis points from changes in vacancy. The total investment annualized, you see this on the top right of page 14, stands at 20 EUR per sq m. So that's really everything, that's maintenance, that's capitalized maintenance, and that's modernization CapEx, which is very much in line with the two previous years. Page 15 shows the development in the vacancy rates. You know that we saw an increase in the first quarter of the year from 5.3% to 5.9%. We have managed to reduce this slightly to In June to 5.8%, in September to 5.7%. As I said, in October, we are down to 5.6%. Our target for the full year stood at or stands at 4.8%-5.0%. Let's see how the fourth quarter develops or how November and December develop. In the past years, we have managed to reduce vacancy rates by approximately 50 basis points. It's clear our target, let's say, to come as close to the 5% as possible. On page 17 and following, we show you the development in Poland, just to point out that we have further acquisitions so that the total build-to-hold pipeline increased from 8,200 units in the last quarter now to 8,500. I already mentioned the new location in Kraków, which is not included in this number, as the acquisition was done after the balance sheet date. Yeah. We should turn to the guidance, which is on page 21. That's the guidance for the financial year 2021, which is unchanged. The midpoint of the guidance stands at EUR 180 million. That's a 4% increase. Looking at the results so far this year, I would say this guidance is quite comfortable, so that should be very well achievable. As always, the payout ratio stands at 75%. Also, because the FFO per share guidance is unchanged, the dividend guidance is unchanged at EUR 0.92. Page 22 shows the new guidance for financial year 2022. We expect an increase in FFO per share and dividend per share of 6%. This guidance is as in the past without any new acquisitions and without any disposals, and it purely refers to the German rental business. For the Polish rental business, which has basically now started in June, we expect result which is just slightly positive, but not really material. Therefore, we decided that to make it more comparable with previous years for 2022, this is again purely for the German business. For 2023, you should then expect for the first time a combined FFO guidance for the German and the Polish business. This EUR 119 million FFO in absolute terms translates into an FFO per share of EUR 1.30. 75 payout re-ratio leads to a dividend per share guidance for the financial year 2022, paid out in 2023 of EUR 0.98. Finally, on page 23, you see the FFO bridge. The most important differences between the FFO II 2021 that we expect to come out at EUR 180 million, and the expected FFO for the next financial year. I mean, if you keep that really short, then we can say, well, we expect higher rents by approximately EUR 6 million. That's a like-for-like rental growth. If we do the exact calculation of 1.8%-1.9%, and we expect a reduction of financing costs for our German portfolio of around EUR 4 million. There are also some smaller effects. For example, higher net income from services by EUR 2.5 million, personnel expenses as we have, let's say the regular salary increases and other effects which are also separately looked at, not that material that lead them to the new guidance. That's it from my side. A short overview about the third quarter results, which are from our point of view, perhaps, in line with what's expected and the new guidance for 2022 that shows even without new acquisitions and based on the German portfolio an increase of 6%. From 2023 onwards, we will expect more contribution from our Polish portfolio. You are very well aware, I think, of how we expect that this pipeline in Poland translates into results. You know that we also have in the guidance in the, in the presentation here an outlook for the development of the number of units. This will be something definitely attractive and meaningful for our FFO contribution from 2023, 2024 onwards. Many thanks for listening so far and of course, now we're happy to take your questions. We will now begin our question-and-answer session. If you have a question for our speaker, please dial zero and one on your telephone keypad now to enter the queue. Once your name has been announced, you can ask the question. If you find your question is answered before it is your turn to speak, you can dial zero and two to cancel your question. If you're using speaker equipment today, please lift the handset before making your selection. One moment, please, for the first question. The first question is from Kai Klose of Berenberg. Your line is now open. Yes, sir. Good morning. I've got a couple of questions, if I may. The first one is on page 25 of the presentation. Could you indicate why for some part of the portfolio like Leipzig, for example, we have seen a 370 BPS increase in vacancy rates as well as in other cities like Salzgitter, 100 BPS or Chemnitz 170 BPS increase in vacancy rates. Secondly, on page 26, what was the reason for a negative rent reversion or negative like-for-like rental growth in Salzgitter? And then the third question is on page 14. Obviously, I think it's the first time for a long time that we saw a negative impact from vacancy changes on the total like-for-like. When and how do you expect this trend to reverse? Good morning, Kai Klose. Many thanks for the questions. Starting with page 25. If you compare the vacancy rates shown in column September 2021, and the vacancy rates shown in column 2020, you should be aware that the 2020 numbers exclude the acquisitions in 2020. Therefore, we have presented on page 26 a kind of like-for-like comparison with vacancy rates, and you already mentioned the slide. Perhaps it's a better view to look at page 26 to read the development in the regions. Yeah, we had an increase in vacancy rate in Rostock and in Salzgitter. Looking also in the previous quarters, this was a quite similar picture. This increase was mainly coming from, I would say, the first half of the year. Especially in Rostock, where also Greifswald is included. We had really an effect from students who were not really renting apartments during the pandemic. We saw in Salzgitter also reduced turnover that led then to the effect in Salzgitter, where we of course are trying to attract also tenants from other landlords. Their reletting results in our portfolio were not as expected. Chemnitz is mainly modernization and CapEx driven, as we are investing quite a lot. In general, I mean, it's very clear, and we're very open that we expected more in vacancy reduction at the beginning of the year or let's say at the end of last year when we published the guidance. We are standing now at 5.6% in October. Our original target was to reduce that to 5.0%, so that's not extremely far away, and we're optimistic for the remaining two months. Yeah, but also the fact, as I said, that we had, although it is very slight, negative effect from vacancy changes on our total rental growth at 10 basis points is of course nothing that we had planned at the beginning of the year. For us, it's clear this is not really something that now changes our business. We're very confident that we hopefully can already show at the end of the year not only further success in vacancy reduction, but also clearly positive effects from vacancy changes on our like-for-like rental growth. Perhaps for us, compared to, yeah, so some other companies, a little bit more difficulties coming from the first half of the year, as in 2020 from the pandemic regarding rental processes. But if you ask us, well, is this something that is really structural in your market? We think the answer is actually no. Many thanks. Maybe the last question, regarding the investment markets and asset acquisition activities. You mentioned that the competition is quite tight. Have you considered maybe to sell a larger part or some parts of the existing letting portfolio in order to recycle capital and to invest that in Poland, for example? We think about more portfolios, but you should not expect really large block sales. We're not talking about, I don't know, 10,000 units. To bring new portfolios to the market of, let's say, 1,000 units or 2,000 units, simply use this momentum, this high demand that we see in the market, it's large competition. We think that's something that makes sense. Therefore, it's not the case that we now change into a net seller. I would say selling a little bit more than in the past in this environment makes sense, and we have the chance to recycle this capital into really attractive and high-yielding properties in Poland. That's, of course, for us a good situation. Understood. Thanks so much. The next question is from Sander Bunck of Barclays. Your line is now open. Hi. Good morning, team. Thanks very much. Couple quick ones, please. First two actually on Poland. Just if you could give a bit further color on rising construction cost inflation, if your thoughts have evolved since the last quarter. If it's impacting any of your margins, et cetera, would be helpful. The second question related to Poland is you mentioned that in 2022 there is a contribution from Poland, but you're not including it in the FFO. Can you just give us a rough feeling of how much the contribution would be if you were to include it, and why it was decided not to include it at this time? Yeah. Good morning, Sander Bunck. Sander, I'm starting with the last question. I mean, I can also give you the numbers. We expect in Poland rents between EUR 2.5 million and EUR 3 million. The FFO impact, if we do really the exact calculation, is something between EUR 500,000 and EUR 1 million positive. Yeah, I mean, we can discuss this, but we thought it's perhaps better to concentrate the guidance on the German portfolio also to make it more comparable. Of course, what we'll do in 2022 onwards is that we also report on the FFO impact on Poland in our quarter results. If you want, we've got two guidances. The first guidance is for the German portfolio, that's EUR 190 million. The second guidance for the Polish portfolio says the result is slightly positive or around zero. But we decided not to put that into a precise number. For 2023 and 2024, of course, the FFO from Poland is much more meaningful. And then you will also see all the figures integrated, but perhaps good to have this in 2022 more separated. Hopefully, this is then more clear where the FFO contribution is coming from. You asked about rising construction costs. I would say compared to the last quarter, this is unchanged. So yes, it's clear we also see in Poland rising construction costs mainly coming from material. If we sign contracts today with general contractors for a project, the price increases are at 5% or even a little bit higher. This is still manageable, especially, sales prices have also increased quite strongly in Poland. As you see now towards hopefully the end of the pandemic, also quite strongly increasing rents. Therefore, there's not any pressure on our margins or not really a material pressure on our margins. What the good thing is that we have still, construction companies available and craftsmen available in Poland to do the construction work. You know that in Germany this is perhaps an additional problem besides the fact that prices have increased simply to get, yeah, construction companies to work. This seems to be in Poland much more manageable. Let's see how this develops, but we are not so much concerned about that at the moment, although clearly it's a topic. Okay, great. Just quickly coming back on the first one, in the helpful range of EUR 2.5 million-EUR 3 million rental income versus the contribution of EUR 500,000-EUR 1 million on the bottom line. That delta, can you just give a bit of color on that? Given that I would have expected that, given very low financing costs on TAG as a whole, it basically means that that delta should have been smaller, i.e. there should be a larger drop through. Are there any other costs that are currently capitalized that flow into the P&L next year? No, it's mainly the fact that, of course, the platform is already there. The personnel costs, the SG&A are there, and the rents are relatively small in 2022. Therefore the EBITDA margin is quite low. This will of course change over time. We are predicting in the presentation, and that's still absolutely valid, an EBITDA margin north of 75%. Yeah, and as rents increase, especially as the platform increases, costs will not increase in the same pace. Therefore, we simply have the picture in Poland today that the platform is already there. I mean, people are building the apartments and so on, and the rents, they will now pick up from year to year. Okay. Currently the platform costs for Vantage, are they fully included in the FFO I calculation or not yet? We're redividing the platform into a platform which is designated for the sales business, which is a smaller one, and a platform which is then designated for the rental business, which is the larger one. Okay. How much of the platform costs are currently included into the FFO I number? That's the majority. If you ask me percentage wise, I mean that's then perhaps around 60%-70%. Just to make the picture complete and perhaps it's helpful for the sales result in Poland, we expect next year also a slightly positive result. In total, the result from Poland coming from FFO contribution from the sales result should be slightly above EUR 1 million. It's not the case that we shift platform costs from FFO I to FFO II just to make our FFO one number a little bit nicer. That's all included. Okay. Just to wrap up on that, basically means that currently the platform costs from the development of whole business included in the FFO I number is roughly around EUR 2 million. Does that make sense? Yeah, that makes sense. Perhaps that's more complicated. I mean, we are also capitalizing the platform costs which are really directly related to the construction work. People- That are working in the construction department that is capitalized, so the platform cost- Sure. A little bit. Yes. For the stuff that's currently under construction, obviously. Yeah. Perhaps just a final comment. 2022 is quite a transitional year in Poland. I mean, when we acquired Vantage, there were ongoing disposal projects, and we received or are receiving attractive cash flows from disposals. We changed the business model of the company at the beginning of 2020. We started with the ready-for-rent project. That leads now to the fact that the first ready-for-rent projects are finished. On the other side, the ready-for-sale projects have now been reduced if the apartments have been sold and have been handed over. Therefore, 2022 is a year with lower handovers and a starting rental business. That explains perhaps why the result from Poland 2022 is, if you want, so it's only at EUR 1 or 2 million positive. Okay. That's very helpful. Thank you very much. One final one on a separate topic. I mean, some of your peers have been acquiring large portfolios recently from potentially a somewhat motivated seller. Have you looked at any parts of the portfolio? Is there anything interesting within that that you would be looking to acquire or are you happy to stay on the sidelines for now? Well, to be quite clear, we're definitely active, and we look at opportunities in Germany as intensively as in the past. It's clear the portfolio, especially in East Germany, is on the market. It fits into our structure. You mentioned perhaps one transaction that was published. It should be clear that we are also very much interested. That's one fact. Yeah, we work on that, and we do this really intensively. The second aspect is pricing. Here we simply have to accept that the prices that perhaps we find reasonable do not seem to be the market prices that are paid today. That's not really something extremely negative for us, but we think it's really good to be disciplined, to be careful with our capital in Germany. As I said, we are optimistic that we will find acquisitions in the future as well, as in the past, perhaps with small acquisitions, buying more frequently. Yeah. Then we have the external growth prospects in Poland, so therefore we are not really under pressure to overpay for acquisitions. Yeah, I understand. Just on that point because I think part of the portfolio in Eastern Germany that transacted was, I think, broadly in line with book values. You're basically saying that given your underwriting, you believe that is still pretty expensive for your liking? Well, as far as I know also, and I think also this was stated in the press releases that this was above book value, so therefore we- Yeah, not by a huge amount, right? Not by 20%-30% or so. Yeah. It depends on which book values you're looking at. Yeah, I mean, we are now here in a dimension also for portfolios in East Germany, where the cash flow yield is not that spectacular if you pay this full purchase price for that. Therefore, we are not under pressure to buy another 10,000, 20,000, 30,000 units to get into the next efficiency level. We think being a little bit more patient, buying that, as I said, perhaps more frequently of the smaller sizes, building up the German portfolio this way really offers better cash returns. Then of course you can argue, yeah, but there should be clearly more yield compression. Yeah, that's a fair point, but we feel more comfortable when we still buy with good cash yields and are not buying with a low cash yield and say, okay, the additional return needs to come from yield compression, otherwise that's not really a positive or a spectacular acquisition. We continue to act as we've done in the past. That's extremely helpful, Martin Thiel. Thanks very much for that team. The next question is from Thomas Neuhold of Kepler Cheuvreux. Your line is now open. Good morning. Thank you very much for the presentation, and thank you for my questions. There are only two left from my side. First, I was wondering if you can give us an update from your point of view on the coalition talks. Is there anything worth mentioning, regarding the residential market which could have a positive or negative impact, going forward? Yeah. Good morning, Thomas Neuhold. I think as most people, I don't know really what is going on in the negotiations in detail. I mean, you know that they have published this preliminary paper. Generally speaking, we thought that was in a first step, a good result that here the text or the statement on rent regulation was very short and was not already pointing in the direction of tightening regulation. I think also politicians have realized that especially for energy modernizations, you need certain returns, you need certain rent increases. I mean, there are a lot of investments coming into the sector in the future. That should hopefully go into a direction where we perhaps continue with the current regulation with slight changes that are manageable. As I think for most people, this is only something that is more personal opinion. I have not really any detailed insights here. Okay, understood. My last question is just out of curiosity. You have the same auditor as Vonovia, KPMG. Vonovia had a revaluation results in Q3, and they said that basically the auditor asked them to do that. I was wondering, did you have similar discussions with KPMG, or was that another topic in Q3 with you? Yeah. While it's correct, also KPMG is our auditor. We had not such discussions, but perhaps the simple reason is that in the third quarter, KPMG did not carry out a review of the financial statements. Mm-hmm. We have a semi-annual review and now the full year audit, so therefore perhaps in our case there was not a need to discuss this intensively with KPMG as the Q3 results as in the past have not been reviewed. Okay, understood. Thanks a lot. The next question is from Marios Pastou of Société Générale. Your line is now open. Hi there. Good morning. Thank you for taking my questions. Just two left from my side. Just firstly, on your valuation commentary from the presentation, if I heard correctly, your preliminary estimates are showing something along the lines of the first half, but maybe slightly below. Is that correct? Did I hear that correctly? Then secondly, on your like-for-like rental growth expectations for next year, I'm looking at around the 1.5%-2% mark, again, similar to your guidance for this year. This still feels fairly low considering what was achieved prior to the pandemic. I just wanted to check what the assumptions were here, and what is being factored into regarding potential rent controls as we move into next year. Thank you. Firstly, you heard that correctly regarding my comments about potential valuation uplift, and that should be, let's say, not too far away from the first half, but that's slightly lower. Hopefully everyone understands that we can't publish an exact figure today, and perhaps also don't want to publish that exactly. So that should be a good valuation result, and perhaps the first half of 2021 was something which was extraordinary. It just becomes clear when we compare this with the past. Looking at the like-for-like rental growth guidance for 2022, it's correct that the guidance stands in a range between 1.5% and 2%. That includes an effect from roughly 30 to up to 50 basis points from vacancy reduction. If you consider this as conservative, Marios, perhaps you're right. We have seen simply with the development in 2021 that especially vacancy reduction in these times was a little bit more difficult as in past. We are still in the pandemic. I mean, infection numbers are rising in Germany and in Europe, so therefore we thought, well, basically to give a guidance which is very much in line with the rental growth that we saw in 2021 in this unchanged environment seems something that should make sense. Okay. Makes sense. Thank you. I suppose the question being as well is, you know, if we don't see any significant changes in an underlying rent regulation, beyond 2022, should we then start to expect that growth to maybe normalize as it was back in the past, let's say like a mid 2%? Is the 1.5%-2% probably more in line with the future now? No, I mean, this looking really mid- to long-term in our portfolio that we have a like-for-like rental growth without vacancy reduction effects of around 2%, that should be a reasonable number. Yeah, and then on top of that would come the effect from vacancy reduction that clearly then depends on acquisitions that we have recently done or certain levels where we are in the respective regions. At the broader picture, it should be more towards 2%-2.5%. Very helpful. Thank you very much. The next question is from Manuel Martin of ODDO BHF. Your line is now open. Good morning, Martin. Thank you for the presentation. Just one question left, regarding Poland, about the political situation in Poland. We see that there are ongoing tensions between the European Union and Poland. Are you a bit worried about political stability or do you see some headwinds coming up from that situation and also from perhaps rising COVID-19 figures? Well, on the political situation in Poland, you could have perhaps two views. The more general views looking at, as you mentioned, the discussions or the tensions between the Polish government and the European Union, that's definitely not a positive. For us it would be, yeah, more or less excluded that these tensions end up in the fact that Poland leaves the European Union or things like that. That should be very clear, how many advantages Poland has from the European Union, and that's clear for everyone in Poland. Let's see how this develops. Then looking at the second view, really detailed in the business that we do in Poland, do we see here any difficulties? Do we have problems with authorities regarding building permits? Are they open to also foreign investors, yes or not? That's all positive. We don't really see here anything that limits our business, anything where we said, "Well, if we would have known that two years before, we would have looked differently at the Polish market." The day-to-day business is going, I would say, very smoothly. Then there's more general topics. Yeah, that's something of course that we closely follow, but so far has not really an impact on our business. Okay. Thank you. The next question is from Thomas Rothaeusler of Deutsche Bank. Your line is now open. Hi. Morning, everybody. Just coming back on from actually in Germany, especially in East Germany. I mean, you mentioned a high pricing level, especially in terms of cash flow yields. Is there any pricing point examples that Mm-hmm. Maybe from recent, most recent transactions, either multiples or yields? Good morning, Thomas. Sorry, this was hard to understand because the line was not really good. Did you ask for a kind of transaction multiples from recent transaction compared with our book values or? Yes. I mean, you mentioned high pricing levels, especially with regards to cash flow yields. Maybe you can provide some examples. I'm not sure whether I understood the question correctly. Sorry for that. Where are cash flow yields going in transactions that we see in East Germany at the moment? I mean, talking about the multiples, you know that we have acquired at 16x, 17x rent in last year. If you look at current transactions, you'll find in such portfolios in the meanwhile multiples north of 20x rent. Then the argument from buyers of these portfolios is of course, yeah, we should expect rent growth in the future. Yeah, okay. That's valid. Secondly, that they expect further yield compression. Yeah, that's also valid, but we think of such transactions like, yeah, what a realist investor, share investors or private people would do say. What we need in such locations, we're talking here about secondary locations, about locations where it's really intensive asset management work necessary. We need from the first day on a good cash flow. That's what drives us, and that's how we still look at that. Of course, we have also increased our pricings over the last years. I mean, the times where we have bought at a 10x or 12x multiple, they are far away, that is clear. Yeah, still we feel comfortable with the strategy of being here really, yeah, careful and perhaps not following any price developments that we see today in the market. Maybe one more question on high price development. I mean, what has been the most recent momentum there? Maybe I've missed it in the presentation, but, for example, most recent momentum with regards to your sales prices there. Yeah. I mean, you've seen two transactions in the market, although the prices were not specifically disclosed coming from the other portfolio. Two large transactions, where we know that the prices are definitely about book values that we also would have in our company. Therefore, that this trend of increasing prices is there, that the fair values of the investment properties will increase over the next quarters or the foreseeable future. That seems to be clear. We are always a bit careful to pick transactions and say, "Well, that's an exact comparable to our portfolio." Therefore we're careful with giving detailed guidance like prices are 10%, 15%, 20% above book values. that they are above current book values and that this trend of increasing values is continuing, that seems to be clear from our side. That you refer to Poland, is that right? No. This was for the German portfolio, and then for the Polish portfolio, if this was the question, sales prices have increased throughout the country. We're talking here about the big six or seven cities in Poland, and that's also Kraków and Warsaw, Poznań and so on, which was good for us to see. I mean, the Polish economy and the Polish residential market managed the pandemic quite well. This is clearly a very positive trend that shows basically that the positive trend from the past continues. The same is true for rents. I mean, we saw in some cities rents dropping during the pandemic. I mean, it's clear that's an unregulated market. In a situation where, for example, students are not coming to their apartments they normally rent, then rents have been reduced, although not too drastically. Now, this trend has clearly reverted. Rents are already back on the pre-pandemic level and continue to rise. Therefore, in Poland also prices are increasing. Looking at the, for example, acquisition growth rates or project growth rates, we are still at growth rates of around 7%. For newly constructed apartments in big cities in Poland in really good central locations, that's still attractive. Thank you. The next question is from Simon Stippig of Warburg Research. Your line is now open. Yeah. Good morning to you, team. Actually, all of the questions were asked already, and I have just two smaller questions. One is the cleanup call of the convertible. What exact cash payment did you have for that in September? Yeah. Good morning, Simon. This was after balance sheet date. I think the total amount in absolute terms was around EUR 25 million. Okay, great. Thank you. Yeah, cash out EUR 25 million all in. Mm-hmm. Yeah. Great. Thank you. Another question in regard to what you answered the question of Sander before in regard to the investment. You mentioned that, yeah, sure there's the aura surrounding this one motivated seller, et cetera, and that there was a larger portfolio on the market. You said, if you would add 20,000, if I got that right, 20,000-30,000 units, it wouldn't get you to the next efficiency level. Could you explain that a little bit? Yeah. Our thinking is, I mean, that there could be a need to grow in size. This is, for example, the case for us in Poland. We discussed during the call the platform cost being still quite small in comparison to the rents. I mean, we have clearly laid the foundation for our growth in Poland. We need to get to a certain size, you know, the 8,000-10,000 units, which is the clear midterm target. Therefore it makes from a strategic point of view also sense to buy, to get to a certain efficiency level that really allows you to operate the residential business in a way that makes sense. That's a difference in Poland than in Germany, where we own close to 90,000 units. Comparing margin improvements between a portfolio of 90,000 units to 110,000-120,000 units. Yes, it's clear. I mean, there's still room for improvement if you have more units. Then the question is: Is it really worth to increase the margin slightly or just in a very small extent and therefore pay a price which is then materially above what you think from real estate perspective makes sense. Is it worth paying a kind of strategic premium for that? Here for us, the answer regarding the German portfolio is clearly no. We are on a level where we think we can do everything that we want. We have an efficient platform and yeah, of course, larger portfolio helps, but the next margin improvements coming from portfolio size are then really small as we have seen in the past when our portfolio was growing. What you're saying is if you turn around that argument and say, okay, your additional increase gain of one unit because you have lower costs in your portfolio, in the German portfolio, then you say that this gain is actually smaller than or is smaller than compared to the higher price you pay for the portfolios in this competitive market here in Germany. Just so that you hear that you're setting three more scale effects in regard to your platform in Poland, but just turning around, I mean, it can still make sense to add, especially because you have a presence in Eastern Germany that is non-comparable to a lot of peers, especially listed peers, that you have a competitive advantage there to just buy additional portfolios. That's what I wondered about. Thanks. I mean, I think you answered the question, in my understanding. That's actually it from my side. Thank you. Yeah, man. Thanks. If there are no further questions, I hand back to the speaker. Yeah. Many thanks all for dialing in and for the discussion. As always, if there are any questions left, please do not hesitate to contact our department or myself. Thanks again for listening to the call. Have a good day and talk soon. Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect now.