Dear ladies and gentlemen, welcome to the conference call of TAG Immobilien AG regarding the publication of the annual report 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 is an opportunity to ask questions. If any participant has difficulties hearing the conference, please press star key followed by zero on your telephone for operator assistance. I now hand you over to Martin Thiel, CFO, who will lead you through this conference. Please go ahead. Yeah, many thanks, and good morning, all. This is Martin from TAG. Many thanks for dialing in to our full- year 2021 conference call. Today we've got not only prepared for you the numbers for the financial year 2021 this year, we also want to discuss with you our new decarbonization strategy that we have published today, and also talk a little bit more general about our strategy in Poland and in Germany. Let's start with page four, the highlight slide, and start as always, with the operational performance of the German portfolio. Vacancy in our residential units came down by 30 basis points in the fourth quarter. That means we ended the year with 5.2% vacancy rate compared to 5.3% at the beginning of the year. Like-for-like rental growth, including and excluding changes in vacancy, was roughly on the levels of the financial year 2020. That means around 1.3%-1.5%. FFO I came up at the upper end of our guidance, so reached EUR 182 million. That's an increase by 5% in comparison to the previous year. In terms of the FFO I per share guidance, we've been slightly, that means EUR.01 above our guidance, and ended with EUR 1.24. Following our payout ratio of 75% of FFO I, that means we will propose for the AGM in May this year to pay out a dividend per share of EUR 0.93. That's also EUR.01 more than original guidance. We saw a strong increase in the NTA by 16% year-on-year. We ended up at 25.54. The LTV came down by roughly 90 basis points year-on-year. Here we ended the year at around 43%. Looking at acquisitions and disposals in Germany, we signed no acquisitions in 2021. On the disposal side, we had some non-core disposals, roughly 680 units that we signed with a quite substantial book profit before any revaluation effect around EUR 12 million. We received now at year-end the second valuation for this year by CBRE, and ended up with total valuation gain for the full- year of more than EUR 500 million. That translates into a 10% value growth for our portfolio, out of which 9% is the effect from the annual valuation without any investments. That means we are now valued in our German portfolio at around EUR 1,020 per sq m or a 5.3% gross yield, compared to EUR 1,100 per sq m at the beginning of the year, and 5.7% gross yield at the beginning of the year. That should still be a level where further improvements are possible. Coming to the next slide and looking at our business in Poland, we are very pleased with the results for the financial year 2021. That means we have sold with our, in 2021 existing subsidiary, Vantage, even a little bit more than expected. The operational results from Poland came out at EUR 6.7 million compared to EUR 9.1 million in the year before. It was clear that we are now changing the business model from Vantage from a pure residential for sale business into a business where the residential for rent business is the largest part. Therefore, this reduction in earnings was absolutely planned. As I said, it's even a bit more than we expected. Total pipeline, so that means finished units, or units under construction and units in planning are now around 12,600 units, and the GAV of the Polish portfolio at year-end is around EUR 350 million. Also in terms of acquisitions, that was a quite good year at Vantage in Poland, so we acquired new land banks and projects for potential more than 3,200 units. An update on our ROBYG acquisition. You know that we announced this acquisition shortly before Christmas. We have received in February the antitrust clearance without any conditions. This was the only condition regarding the closing, so the closing is now expected to happen in two weeks at the 31st of March. The final purchase price for this transaction will be roughly EUR 540 million. On the next page, you first of all see our unchanged FFO and dividend guidance for the financial year 2022. We're still predicting a 5% increase. Midpoint of the guidance for FFO I, which is still purely coming from our German business, is EUR 190 million. That translates into EUR 1.30 FFO per share and EUR 0.98 per share as a dividend. What is new is our FFO II guidance, and we're guiding here in the midpoint EUR 250 million. Why are we publishing today an FFO II guidance? It is clear that still from our existing subsidiaries, that means Vantage and now new ROBYG, the largest part of earnings in 2022 is coming from disposals. Therefore, we thought it's absolutely useful and also necessary to give you here a better understanding on the results that we achieve on that. If we take the midpoint of the guidance from FFO I and FFO II, that's a difference of around EUR 60 million, which is coming then from our business in Poland. Please be aware that in terms of the ROBYG acquisition, not the full year will be consolidated. It means we have the earnings from ROBYG just from April onwards, that means from second to the fourth quarter this year. That translates, of course, also in a very strong increase in FFO II per share. We expect that we achieve an FFO II per share of EUR 1.71 compared to EUR 1.29. This would be an increase by more than 30% year-on-year. We're very happy, and perhaps you've seen this also yesterday afternoon, yesterday evening, that we have received a second investment grade rating now from S&P Global Ratings with a BBB- in a stable outlook. This is something additional to our already existing investment grade rating from Moody's, which is Baa3 and a negative outlook. Coming to page eight, that shows you the EBITDA, FFO and AFFO development. I won't go here into too much details just to point out that not only the FFO I increased in financial year 2021 by roughly EUR 10 million, but also the AFFO increased quite strongly by roughly EUR 13 million, so 13%. That means we are able to increase our earnings, to increase our cash flows without the need to invest substantially more in terms of CapEx. Next slide, page nine, shows the NTA development. As I said, a 16% increase year-on-year, of course, mainly driven by a we think very good valuation result. If you take additionally into account the dividend that we have paid in financial year 2021, that's then a total of 20% return, including this dividend. Coming to the next slide, page number 10, that shows you the financing structure. We have now an average maturity of the total financial debt of around 6.3 years. That's an average interest rate of 1.39%. Just for clarification, this 1.39% is not influenced by the bridge loan that we have in place to refinance the ROBYG acquisition as this bridge loan so far has not been used. The closing of this transaction, as I said, is now in two weeks at the end of March, so we have not used the bridge loan so far. That means that this interest rate is really something if you want so pure without any effects from the loan. Turning to page 12, I want to give you, yeah, just an update and perhaps some more general thoughts about where we stand in terms of our strategy. Today, we are active in two markets. We're active in Germany, you know this very well, and since two years, we're active in Poland. We think in today's environment it's clear an advantage that we have these two markets. How should we describe these markets? I mean, Germany for us is clearly the basis. That's an extremely stable, extremely reliable, extremely predictable market. We're very happy to operate in that. On the other side, I mean, that's clear we see increasing regulation. We see high competition when it comes to acquisitions. Therefore, a strong growth in external sizes and absolute amounts in Germany is really difficult. Is that a problem for us? No, not really. I mean, we have still potential, and that's our strategy in Germany more mainly to grow via active asset management, also to crystallize value via selective asset disposals. If you want so a kind of way going forward in Germany is simply be disciplined regarding the capital, regarding investment, use the internal growth prospects from the existing portfolio. Yeah, we are sure and convinced we will also have further acquisitions in Germany, but this is then more on an opportunistic basis. Regarding the Polish market, our strategy is different. Here external growth is much more important, and we have done now in December last year a very important step for us when acquiring ROBYG, which of course then is for us in addition to our existing subsidiary Vantage, a basis for really external growth and attractive terms that we expect to come. Similar to Germany, Poland has extremely good fundamentals. We see strongly rising demand for rental apartments. We see that people are looking for new construction apartments to have a better quality of life. We see undersupplied market environment, so clear housing shortage in Poland and a strong economy. We are focusing on this product, newly constructed apartments. We are trying to deliver the right product for this growing residential for rent market and therefore, based on the attractive yields that we see in the market, we're very convinced that the development in Poland will be very attractive. Contrary to Germany, where selling apartments is something, yeah, just more or less referring to non-core assets or in some cases, of course, regarding capital recycling plans, to other assets, but in limited sizes. In Poland, we're following two business model. Let us clearly say that the Build- to- Hold model is the clear focus, but we will also keep the Build- to- Sell model in the future. Page number 13 shows you also some numbers, an overview of our current Polish portfolio. As of now, we have a quite significant pipeline with the potential to have over 20,000 letting units. That's our target to have in the next six to seven years, more than 20,000 residential for rent units in Poland. The total pipeline adds up to more than 38,000 units, so roughly 20,000 units or 21,000 units for the residential for rent and roughly 17,000 units for the residential for sale business. Page number 14 shows you some ESG strategy essentials. First of all, we're very happy to announce that we have, in the meanwhile, also from MSCI, an increased rating, so we are rated doubly. In addition to a sustainability rating of 9.9. Both of them are, we think, really great scores. That's just perhaps something that underpins how important these, I mean, ESG activities are for us. Today, we are publishing, and we come back in a second in more detail, our decarbonization strategy. That means how are we going forward to bring our portfolio to climate neutrality by 2045. First of all, the advantage from our side is that we have a good starting point. Looking at the CO₂ emissions per sq m per annum, we are at around 31.9 kg per annum. That's based on the data from 2019. We can tell you that we're publishing in April with our sustainability report, the data for 2020, so the CO₂ emissions will be a little bit lower. We should expect a number of 31.5 kg for 2020. Comparing that to peers, we are below average. We have a lot of very well-maintained prefabricated buildings in East Germany that we have acquired in former years from state-owned companies where we have access to district heating. This enables us and puts us into a position where we of course need to invest, but the future CapEx that we need to bring the portfolio to climate neutrality is, let's say limited. On the right side, we've done a very simple calculation how the CapEx levels will evolve over the next, basically, 20 years. We're currently of a CapEx level per sq m of EUR 13.30, and we expect that we need to increase this by EUR 5.70 per sq m on average. That brings us then to a total level for CapEx of around EUR 19 per sq m. Which is, for us, absolutely manageable and also for our tenants, something where they need no concerns about the strong pressure for rising rents because we need to invest massively. That's not the case. Page number 16 and 17 shows you more details on the German portfolio regarding rental growth. I already mentioned that we're here roughly on the leverage like in the previous year with, you see this on page number 16, very similar investment needs. Regarding the vacancy reduction on page 17, we ended up the year with a vacancy rate of 5.4%. Yes, we were off. Originally, we wanted to get to 5.0%, so 40 basis points higher the vacancy rate at year-end than we expected. The first half or the first quarter of the year, you see this increase on page 17, was more difficult during this time. If you remember that, we had the lockdowns, so therefore the business was a little bit hurt. Page 18 shows you more details on the portfolio valuation. As I said, 10% total value growth, out of which 9% valuation result. The EUR 1,200 per sq m valuation level should be a level where we still have room to improve. Yeah, looking into 2022, of course, always difficult to guide further valuation gains. We're convinced, as we see this market in Germany extremely competitive still, that we will see further price increases. Therefore, the next valuation results to whatever exact extent for 2022 in terms of a positive valuation result should already be in the cards. On page 20, we give you an overview of our portfolio in Poland as it is at year-end 2021. That means before the ROBYG acquisition. We have made quite some progress during the year. We have completed nearly 500 units as per year-end. Roughly 4,000 units are under construction, and we have additionally more than 8,000 units or potential units land bank. That brings us to a total pipeline of 12,500 units. Page number 21 shows our rental units and on offer as of January this year. We were very proud to announce that the first three projects in Wrocław that we have rented out in the second half of 2021 have basically no vacancy rates. What we see there is a good, great success in renting demand. Also the first, at this stage, in this first stage, small project in Poznań shows strong demand. Already in the first two, three weeks, 21 out of 30 units have been rented out. We know that this number of rented out apartments is still small, but that is clearly everything that we see in the market in terms of rental demand. Here, our first experience make us absolutely comfortable that this larger step that we made into the Polish market with the acquisition of ROBYG was absolutely right to do. Page number 22 shows you then some details, some numbers on the combined portfolio, Vantage and ROBYG. The 12,600 units in Vantage, plus the current pipeline of ROBYG, which is around 25,500 units, now brings us to the total number that I already mentioned of 38,000 units or potential units that we have in Poland, out of which, as I said, the largest part is designated for the residential for rent business. Talking a little bit more about ROBYG on page 23, but you've seen already that ROBYG has published its annual results for 2021 already last week. We're very happy that these numbers have been absolutely positive and excellent from our side. A strong growth in revenues, a strong growth in profit on sales, a strong growth in the net profit. ROBYG, even in a difficult environment of the COVID-19 pandemic, cost inflation regarding construction costs, showed very, very strong results. As we said, more than 12,000 units from the current ROBYG pipeline is designated already for the Build- to- Hold pipeline. We will sit down with the ROBYG management now after the closing in more detail to make it a year more detailed plan, especially regarding the timing. We will come back to you with further details how this pipeline will build up into real ready-for-rent projects finished in the future, now at the latest with the Q1 figures. As I already said, today we are publishing our decarbonization strategy. Let me first of all start on page 25 with our ESG strategy in general. I mean, where are we here when we talk about the decarbonization strategy? Well, clearly we are in the environment section of our ESG activities. More specifically, if we look at page 26, we are here in the third layer, climate and environment, where we have embedded this decarbonization strategy. That's just to clarify what does that mean if we talk about a climate neutral portfolio. I mean, in the meanwhile, there has been developed a kind of market standard among residential companies in Germany, not only listed, but really across the sector. That's The consensus was that if you bring down the CO₂ emissions per sq m to a level below 8 kg per sq m, that fulfills the 1.5 degrees climate goal. That means that is considered to be something which is climate neutral. This is basically the target, and you see this on page 27. The question, how do we bring our portfolio from a current level of 31.9 kg per sq m to below 8 kg, or in our case, below 7 kg per sq m by year-end 2045? As I said, the status quo is definitely a good one. Looking, for example, at the energy certificates in our group, which is shown on the left side of page 27, you see that more than 60% of our buildings in Germany already have an energy efficiency certificate of C or even better. In the two lowest energy efficiency classes, G and H, the percentage is below 5%. That's a quite good starting point. That leads then to the fact that the investments that we need to take in the future are something which is absolutely doable. Page 27 on the right side points out the path that we want to go, so the targets that we have set. By 2025, that means in a little bit more than three years, we want to reduce our CO₂ emissions below 28 kg. By 2030, it should be already below 22 kg. As I said, by 2045 at the latest, we want to have CO₂ emissions below 7 kg per sq m. Page 28 shows you how the investment volume is composed. We expect as of today that we need to invest roughly EUR 690 million. Of course, not next year, within the next more than 20 years until 2045 to reach this target of CO₂ emissions. We've given you here a quite detailed breakdown on which measures we need to take. We have done here really extensive work together with an external advisor, how to get there and how this investment volume is composed. I mean, it's clear we're talking here about investments for the next 20 years. There's always uncertainty, but perhaps it's good simply to keep the message, we have really detailed plan. We have a good starting point. The investment volume, whatever the exact outcome there is in the future, should be something which is manageable. Again, if you break that down on a per sq m basis, we're ending up now with a total CapEx in the future, perhaps not already from 2022, but 2023, 2024, you will see such levels of around EUR 19 per sq m, which is still a level, if you compare to the peer group, which is below average, which we think is a good sign for our portfolio quality. Finally on page 13, again, our guidance for the financial year 2022, which is unchanged regarding the FFO I guidance. We're still guiding for a 5% increase. New FFO II guidance, including the Polish business, again, including also our new subsidiary, Vantage, but only from the second quarter onwards where we expect an increase by more than 30% to, in the midpoint, EUR 250 million. That's it from my side, regarding the presentation. Thank you so far for listening to it. Of course, now I'm very 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 a 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 Thomas Rothäusler of Deutsche Bank. The line is now open. Good morning, everybody. Couple of questions. Firstly, on the Russia-Ukraine crisis. I mean, has this changed your risk perception on the Poland business expansion? I mean, could this lead to an expansion mode more skewed to Germany again, maybe? That's the first one. Yeah. I mean, good morning, Thomas. No, this has not changed our view on Poland. I mean, first of all, it's clearly a tragedy what happens here regarding the war in Ukraine. The outcome is of course difficult to predict. What are trends that we already observe? First of all, looking at potential negative effects, is it likely that we see problems not only in Poland, but elsewhere regarding supply chains, increasing prices for material? Yeah, that should be likely. I mean, one needs to be realistic. Although today we don't see anything already in the market, so nothing that happens on a construction site and so on. Depending on how long this war really takes, what is the exact outcome that could be then of course something negative. What do we see on the other side? We see an extreme strong inflow from people from Ukraine, not only into Germany, even more into Poland. This morning it has been announced that already 1.8 million people from Ukraine came to Poland. I mean, it's difficult to say how many people will stay in Poland, but it's clear a large portion of that will stay in Poland, as there even before the war, more than 1 million Ukrainians have been living in Poland. The language is quite similar, culture is quite similar. Looking at mid- to long-term perspectives for the Polish residential market, perhaps as well for the German residential market, I mean, it's hard to say this having this war in mind. That's more something positive. I mean, do you sense already maybe a lower demand for Build- to- Sell product maybe on, I don't know, weaker consumer confidence or something like that? Or maybe also the local financing terms has changed massively? I don't know, but just to get a rough idea. Yeah. You don't see this already now in numbers, but I mean, the war started perhaps three weeks ago. That is still early, so there's not really something a reliable comment that we can give on that. What would be the consequence if that happens? I mean, this would be then of course something supportive for our residential for rent market or product. What is clear, I mean, the demand for people for new constructed apartments, for living in an apartment that has a better quality is there. By the way, higher inflation, higher interest rates makes it then perhaps more difficult for people in Poland to buy an apartment. Also, this would be something positive for us. When we break down our portfolio into residential for rent and residential for sale apartments, just as a background, we're still quite flexible. In many cases, we are dividing, for example, larger project because we say, well, perhaps 1,000 residential for rent units in one location, that's a little bit too much for the market, so better divide that. If we see that the demand is really then in the future, for example, even more from the residential for rent side. Yeah, we are of course then flexible to do, that's in my example, all the 1,000 units as a residential for rent apartment. Here we are, I think, quite well positioned. Okay. Another question is actually on the bridge loan. When you plan the takeout in the course of this year, and you say by capital market transactions. I mean, is it possible that you elaborate on that? I think with the deal announcement, you referred to a strengthening of equity base and also potentially disposals. Maybe we can get some update here. Yeah. First of all, also to clarify the numbers. The bridge loan has a total volume or total potential volume of up to EUR 750 million. The purchase price for ROBYG, as I said, the final purchase price will be in euros around EUR 540 million, out of which EUR 70 million has been already paid from our side from existing cash at signing. It means now when we have the closing in two weeks, we need to pay EUR 480 million. The remaining part of the bridge loan is for us there. I mean, we simply wanted to have this as a kind of buffer. If we see some debt, for example, on the public level, where banks have change of control clauses where we need an early repayment, it doesn't look like this is the case. If we need additional working capital within the next month. This is the kind of buffer. We're talking here perhaps in rounded numbers, basically of a refinancing need in the course of 2022 of roughly, yeah, EUR 480 million-EUR 500 million. Yeah. What is also clear is the framework. I mean, we are very much committed to our investment grade rating or since yesterday, to our investment grade ratings from Moody's and S&P Global. We're also committed to our LTV target of 45%. I mean, the LTV at year-end was 43%. We should expect when we now have the closing pay the purchase price that we passed the LTV target, but it should not be nothing for the medium term. That should be perhaps something for, yeah, the Q1 result, but also for the Q2 results. Then we want to have it back very clearly on 45%. That means that we of course look at a reasonable mix of equity and debt. Here, I mean, of course, we have the options on the table that should be then, yeah, more self-explanatory. Okay. Maybe last question on the ramp up of the Polish business. What is roughly the CapEx level we should expect annually for the ramp up in the next couple of years? For the existing vintage pipeline, the calculation was quite easy. We expected roughly EUR 1 billion for the residential for rent pipeline. In five years, that brought us to a CapEx level of around EUR 200 million. That's already the case for 2022. For 2022, the CapEx requirements will be lower, as we still have a lot of inflows from cash flows from residential for sale business. From 2023, perhaps already to some extent in 2022, we will of course also need to finance public investments. If you know that we are basically doubling now our residential for rent coverage from 10,000- 20,000, knowing that the investment in locations like Warsaw, like Gdańsk, require then that's a little bit higher prices, but also of course lead to higher rents. In rounded numbers, we are in investments between, let's say, EUR 400 million-EUR 500 million from 2022, 2023 onwards. Still, besides the potential financing that comes from TAG, I mean, we have the possibility and we're actively doing this to have strong cash inflows from disposals. Please remember the quite significant pipeline that we have in the residential for sale business, which is nearly 17,000 units. That means it's not necessary that we are financing the full CapEx requirements via TAG. There will be already strong cash flows from existing business at Vantage. Okay, thank you. The next question is from Sander Bunck of Barclays. Your line is now open. Hi, good morning, everyone. Thank you very much for that. Just a couple questions, please. First one, and I'll do them one by one. First one. If you can give a bit more clarity or guidance on how much your current households spend on energy costs relative to the overall rent bill? Good morning, Sander. Well, I'll give you the numbers. The total rent without service charges in Germany is around EUR 5.50. The total service charges on average are something at, I would say, EUR 2.50 to EUR 3. So that brings our tenants to a total rent per sq m, including service charges of around EUR 8 to EUR 8.50. The heating portion of that is of course the largest part within the service charges. Can't give you exact numbers, but I would say it's clearly more than 50%. Okay, thank you. Is it fair to assume that EUR 2.50-EUR 3 is set to increase very significantly over the next six to 12 months? Yeah, that should be a realistic assumption. I mean, we are all aware of the strong increases in energy prices, and that's then something that increases the service charges. If background of your question is brings that perhaps some of our tenants to affordability levels where we then not anymore able to raise the rents. We're not that much concerned about this. Why is that the case? If you look at affordability ratios, that means what people pay from their net income after taxes for the total rent, including service charges. We know from our last housing report in East Germany, which is the last part of portfolio, that those levels are between 20% and 25%. There should be still room. Clearly, of course, it's not good to see for us and of course not good to see for our tenants that we have higher energy prices. We're not concerned that brings us, if you want to a certain cap. Sure. Okay. Would you have any contingency plans? Well, I wouldn't say contingency plans, but do you have any? I think there was a pledge during COVID times that if people were in financial hardship, you would support them. Is that pledge still alive, or is it a different situation? What I would say in general, we're supporting our tenants if they have a promise to pay the rent. That could also refer to situation where they have problems to pay the rent and tenancies, the total rent, including service charges, because of increased energy prices. I mean, that's. I would not say day-to-day business, but that's something that we do now for years, that we're trying to find solutions with our tenants. There are not any special programs in place to support tenants against increasing energy prices. I would say this is something that we're generally doing, yeah, every day in our portfolio. Okay. Sure. Thank you very much. Kind of second question I had was on the rent growth number. I mean, if you look at just the trend over the last couple of years, then it is noticeable that there is just a slowdown, whether it is with or without a reduction in vacancy. How do you see, and also basically in light of the previous question, how do you see that evolving over 2022 and 2023? Maybe not just for Germany, but also just the rental market. A bit more color on the rental market in Poland. Well, for Germany, the guidance that we already issued in November for the total rental growth between 1.5% and 2% is absolutely unchanged. If we are on our way and we're optimistic for 2022 that we can reduce vacancy as you expected from us, that should be something which is, yeah, absolutely achievable. That means a like-for-like rental growth without vacancy effects of around 1.5% as we have achieved in this year should be something, I would say normal. On top, some vacancy reductions. That brings us to that number. Yeah, let's see how this develops. Perhaps this is also a good estimate for now for the year 2023. In Poland, it's a little bit more difficult to predict. I mean, we can look at some statistics from prior years, how rental growth developed in our product, and that's, I think, important to mention. Our product is new constructed apartments in the largest cities in Poland with a good quality, where rental growth was between 2% and 4% per year, in line with increases of salaries. Affordability ratios in Poland did not weaken. We don't see here something that changes the picture in the future. I mean, we of course need to be careful with all the developments that happened in Poland. We just discussed this, potential effects from the war. Thinking about the fact that a lot of people from the Ukraine are coming to Poland, this should support the market and it means support our strategy even more. We're optimistic that we see here quite good rental growth in the future also in Poland. Okay. Perfect. Very last question. Anything you can say in terms of valuation uplifts for the upcoming year? Or like how your discussions with the valuers are currently evolving? Are they continuing to say, look, yields are still compressing as you kind of highlighted in your opening remarks? Or is it probably more stable going forward? I think for 2022 we are absolutely optimistic, and we see that's good news for valuation side. It's more difficult news for the acquisition side. We see prices here still increasing. I mean, you're also following very closely transactions in the market. Everyone selling above book value. You know all this. So that we see valuation gains stopping in 2022, that should not be the case. We're a little bit warning investors, market participants, that from now on we see every year in German residential a double-digit valuation uplift. That would not be something healthy. Perhaps we are then, I don't know, towards the end of 2022, 2023, more back on a normalized level. If you ask us, well, what is a normalized level? I mean, a valuation uplift of 3%, 4%, or 5% annually year by year should be something very healthy. We're of course in a market environment where prices have increased rapidly. That's not the end of the development, definitely not. I mean, we are a little bit more careful with assumptions regarding valuation results in the next four to five years. Super. That's all very helpful. Thank you very much. The next question is from Manuel Martin of ODDO BHF. Your line is now open. Hello. Thank you. Basically my questions have been asked. There's only one remaining. It's a little one. It refers to page eight of the presentation of the FFO table. It's a detail. It's on the valuation result of the adjustment of EUR 525 million for full- year 2021. In the P&L, I've seen a valuation gain of EUR 540 million, and there seems to me to be a discrepancy for me between these two numbers. Maybe you have an idea on that. Good morning, Manuel. We can of course clarify that. The difference refers to the revaluation result in Poland. You know that the FFO I that we calculated and that we are presenting is purely from the German business. Therefore, when we start here on page eight with the consolidated profit, deduct the net income from Poland, and then basically start with the net income from Germany and do some line items that we add and subtract. That means the operating result that we then subtract is only from Germany. EUR 15 million difference, that's the operating result that refers to the Polish business. Oh, okay. Very clear. Thank you. Which is by the way, if I just may add, is not a bad result. I mean EUR 15 million, that's an absolute amount. Not really huge. Based on a year-end EUR 350 million GAV at the beginning of the year, I think it was EUR 150 million GAV. That's quite a strong relative result already. It's also indication where values can go to in Poland. Oh, okay. Okay, great. Thanks. The next question is from Marios Pastou of Société Générale. Your line is now open. Hi, good morning. Thanks for taking my questions. I've got a couple from my side. So firstly, this slide where it mentions the estimated future CapEx increases going to around the EUR 19 a sq m. Can you give us any idea over kind of the timescale of where that's gonna increase from your current EUR 13 a sq m level? Will it be, you know, in the next two to three years, for example? Yeah. Good morning, Marius. Well, perhaps 2022 is a year which is, you know, where we should see some already increased CapEx, but not already on the new level. From 2023, 2024 onwards, that should be a level that we already have. It could also be the case that in general we are in the first years a little bit more careful and maybe of course doing the obvious things. What does it mean if we do a modernization project for an apartment block which is fully vacant, which happens from time to time, for example, when we acquire new portfolios. Then we do perhaps a little bit more than previous years because we have the clear target now to bring our portfolio to climate neutrality. Is it the case that we start now with modernization programs throughout the portfolio extremely quickly? No, that's not the case. I mean, we simply also need to observe what happens from a technology perspective now. Perhaps investments or CO₂ reductions that we do in five years or 10 years are cheaper based on the technology that has developed over these years compared to today's prices. Therefore, please take that as an average for the total investments. We will increase our CapEx step by step. Of course, this is a level that you should expect, yeah, to start not only in the long term, but also clearly in the next years. Okay. Very helpful. Thank you. Just on the same topic with regards to subsidy programs. Is this something which has been factored into your wider ESG targets, you know? Is there any concerns that changes to these programs, say, beyond this year, for example, could maybe have an impact on the total investment potential? Thanks for asking this question, Marios. Then I can clarify. We have assumed that the existing subsidy program, which is currently revised, the BEG in Germany, will be replaced by a similar program. We have taken the subsidies from the former BEG into our calculation. Is this a realistic assumption? We think yes. I mean, what is perhaps a little bit more under pressure in the future is subsidies for new constructed apartments. That's not what we're doing. Perhaps projects that will benefit in the future from that, even more subsidies. At least that's what we hear and see in some articles or when politicians elaborate on that. Projects that could benefit are projects where you modernize existing buildings. We see even more potential in this regard for more subsidies than a concern that we need to revise our plans dramatically because subsidies have been eliminated. Okay. Very helpful. Thank you. Just one final one, a very quick one from my side in terms of more detail on ROBYG. Did you mention that we should expect this with your first quarter results, or is it likely we should see something before this in terms of more detailed timelines, et cetera, on the pipeline? Yeah. That's our target. We're publishing in the second half of May, our Q1 results. Then to give you also more details on how we this pipeline of residential for rent units, you know the target of 20,000 units translates into finished units in 2022, 2023, 2024 onwards. At least to give you a range. At the moment, I mean, of course we're already in contact with the management teams of ROBYG and Vantage, but I mean, we still have to respect the fact that the closing has not yet happened. We can do this also in more detail, and we can publish that, hopefully then with the Q1 figures. Perfect. Great. Thank you very much. As a reminder, if you would like to ask the question, please press zero and one. The next question is from Andre Remke of Baader Bank. Your line is now open. Hey, good morning, Martin. Also from my side, a couple of questions. First on your investment program of EUR 690 million you mentioned. Surely it's for a long time period, but in general, what cost increases are assumed here? Because it seems to be — to become more cost intensive, especially in these days, to invest into refurbishments as everybody has to speed up now. What is the basis here? Yeah. Good morning, Andre, and of course, a valid question. I mean, we have penciled in cost increase over the next 20 years every year by 3%. If you look at today's prices, I mean, that's higher, but we have had the following assumption that we have ongoing cost increases. On the other side, we have also what I mentioned before, technological improvements that perhaps make projects that today have a certain price in the future a little bit cheaper, although we have perhaps cost inflation for the material itself. You know what I mean, that we have more efficient techniques in the future to work with. Therefore, we thought a three percent cost inflation on average year- by- year for the now more than 20 years is a good assumption. I mean, it's an estimate, clear. I mean, you can also argue that perhaps 4% is more valid or perhaps even 2%, but we thought or we felt that 3% is a reasonable number. Okay. Thank you. Second question is on your acquisition. What is your or will be your pro forma LTV after the purchase price payment, and what kind of goodwill do you expect from the acquisition? Yeah. Both is difficult to predict because we need to do the purchase price allocation. Now, after closing, based on the values of the 31st of March. The purchase price allocation means mainly that we need a full portfolio valuation of the ROBYG portfolio, so land bank, projects under construction, and so on. I mean, we have always only some estimates. We expect regarding the LTV that we see an increase from currently 43%, perhaps to something between 48% and 50%, just to give you a rough guidance where we are. Again, it's difficult to present here an exact number because we don't know the exact values from the property valuation as of the closing date. How could we see it? You have LTV target of 45%, as the year only started, so you have a lot time until year-end. Could we say that it is your target to reach it within your range of 45% at year-end this year, or gives you more time on that target? What is your thinking at the moment? Yeah, I would say the case you should expect is that by year-end 2022, we're back on our LTV target. I mean, we of course have some additional investments in 2022 to do with our Polish business. But as said, ROBYG has quite a strong cash inflow from disposals in 2022. I think nearly 90% of the apartments that are handed over in 2022 have already been sold. So that's all on the way. That means for the ROBYG pipeline, yes, of course, we need to support the colleagues in Poland with the first residential rent project, but you should not expect massive cash inflows that we need into the ROBYG pipeline. just taking the, yeah, let's say 48%-49% estimate of the LTV, that's not really that far away from the LTV target, you know. Therefore, I would expect that towards year-end 2022, we're already back at the LTV level that we want to have. Perfect. Thank you. The very last question on page 23 on ROBYG's business overview. You divided the investment cost per sq m, EUR 2,300 for Build- to- Hold, versus EUR 1,900 for Build- to- Sell. There is an explanation for the delta of EUR 400 per sq m is based on future CapEx. Could you elaborate a bit on that? Because I assume that these are brand-new buildings. What is the time horizon for the delta of EUR 400 per sq m? Happy to clarify this. This EUR 1,900 per sq m and the EUR 2,300 per sq m are the effective purchase price from a TAG view on this portfolio. That means we've taken the purchase price for the shares, plus the future CapEx from our business plan to finish this project. Then we end up with total investment cost, for example, for the residential for sale project of EUR 2,300 on the ROBYG level. That means what ROBYG really pays, it would be even lower. We have taken here the view and wanted to present a number to you and to all investors. What is basically the purchase price for us for the ROBYG projects? That means we are basically paying on our estimates EUR 2,300 per sq m, on average for one residential for rent apartment. The per se purchase price allocation is values the Build- to- Hold pipeline stronger? That's done for both pipelines. Also this EUR 1,900 per sq m for the build-to-sell project has this sold. It's more an economic construction price based on TAG level. Okay. Yes. That's from my side. Thank you very much, Martin. The next question is from Tom Carstairs of Jefferies. Your line is now open. Morning, Martin. I just had one question on the vacancy side of things. I'd appreciate you sort of commented briefly on that, but I wondered whether you could go into any more detail on, specifically, Leipzig, Rostock and Salzgitter. Good morning, Tom. I would say there's perhaps nothing specifically to comment as a development in the last weeks or months. I mean, if you remember the development and our communication during financial year 2021, we saw this increase by, if I remember that correctly, 60-70 basis points in the first quarter. From there on, we were able to reduce vacancy. I mean, we know always the first quarter is a weaker quarter in terms of vacancy reduction. It will be for sure, again, also in 2022 the case. This was, let's say, exceptionally weak back on the developments of the pandemic. After that, I have nothing in my mind to say. Okay, here we see some special developments. I don't know, in Salzgitter or in other regions. Again, be optimistic for 2022, also supported by the fact that we really see now people from the Ukraine coming into Germany. I mean, we first of all, of course, offering our help. We have already contacted cities to provide them with apartments if they need. First of all, we're not thinking so much about our economic profit. If you look into the mid to long term, I mean, for the people in the Ukraine, that's a tragedy. I think countries like Germany and Poland will benefit from the fact that people from this country are coming and are searching apartments. Okay. That's helpful 'cause that answers my second question. Just going then back to vacancy. I mean, in my head I've got 4.8%-5% you were kind of maybe hoping you might achieve for 2021. Are we now thinking it's more likely to be that for 2022 or? Yeah. 4.8% would mean a vacancy reduction of 50 basis points. That's a good estimate. I think that's what we already also communicated with the full-year results that we expect. I think the precise number was between 30 and 50 basis points for vacancy reduction. Starting with the 5.3% this year, that should be then a good range to aim for year end. Okay. Lovely. Thank you. The next question is from Simon Stippig of Warburg Research. Your line is now open. Good morning. Thank you for taking my question. I have just one question left, and it's on page 44 of the presentation where you see your TAG return on CapEx calculation for the year 2021. If I look on the right side for your return on total investment decreased, if I compare it to the year 2020. Maybe you can give some insights into that. Thank you very much. Yeah. Good morning. Good morning, Simon. I mean, what we are already doing today is that in large modernization measures that's shown on page 44, which means we are not only modernizing apartments, but we're modernizing the full block that we're doing more than in prior years. More means that we look more on CO₂ emission reductions, and that simply requires more CapEx, and that simply leads to lower returns, which does not necessarily mean that the returns are not attractive. I think that's the fair point that we all need to accept that we still have reasonable, I think also attractive returns from such investments. The goal to get the portfolio climate neutral, and that's for everyone, comes in line also with the fact that we need to invest more. Of course we get rent increases, but perhaps not in that extent that we had with modernization programs that we could do in the past. Yes, again, our investment program is very targeted. It's not a massive program that will not change the picture at TAG in terms of CapEx in general. Therefore we are very, very positive that we can really still offer decent returns to our shareholders. Okay, great. Thank you. As there are no further questions, I hand back to the speaker for the conclusion. Yeah, many thanks. Many thanks all for your time for listening in the call. As always, if you have questions, please feel free to contact Dominique from our IR department or myself. Happy to see you in the next weeks within our roadshows, and hope to see you and talk to you soon again. Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect now.