Good afternoon, ladies and gentlemen, and welcome to the Vonovia Interim Result H1 2025 Analyst and Investor Conference Call. My name is Yusuf, the Chorus Call operator. I would like to remind you that all participants will be in listen-only mode and that this conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star followed by one on your telephone. For operator assistance, please press star and then zero. This conference must not be recorded for publication or for broadcast. At this time, it's my pleasure to hand over to Rene. Please go ahead. Thank you, Yusuf, and welcome everybody to our earnings call. Speakers today are once again CEO Vonovia Rolf Buch and CFO Philip Grosse. They will be happy to lead through today's presentation and then answer your questions. With that, over to you. Thank you, Rene, and also a warm welcome from my side. Following a strong quarter, the first quarter, we have been able to keep up some momentum, and we are happy to report a strong first half as well. Let me start with the half-year portfolio evaluation. In line with what we have guided, we saw a like-for-like value growth of 1.3% of our standing portfolio during the first six months. Going forward, we largely expect trend growth to translate into organic value growth based on our conviction that market yields will no longer expand. In terms of operation, our market environment and operating fundamentals remain, like always, rock solid, which should not come as a surprise to you. The rental segment is fully on track, led by organic rent growth of 4.4% year on year. In our non-rental segments, we see continuous acceleration of profitability with good progress in all three segments. As a consequence, we delivered double-digit growth in EBITDA and operating free cash flow. We have continued to actively manage our financing position with EUR 1.3 billion of convertible at very attractive cash coupons and a bond buyback of an aggregate volume of EUR 800 million. While it is more of a technicality than anything else, we have completed the DPLTA process, so the domination and profit and loss transfer agreement between Vonovia and Deutsche Wohnen is now in place. Deutsche Wohnen shareholders are now able to exchange their Deutsche Wohnen shares into Vonovia shares via their custodians if they want. This completes the Deutsche Wohnen integration, and Vonovia is now a fully integrated company where we can leverage the full potential on the larger scale going forward. I give you another hint: look in the past, what happens after the full integration of Gagfa into Deutsche Annington, and this will be the future going forward for the joint company. Based on our good momentum and strong H1 performance, we are confident for the remainder of this year and therefore increase our 2025 guidance as follows: organic rent growth will be now greater than 4%, rental income and adjusted EBITDA total we will now see at the upper end of the guided range, and adjusted EBIT range will be increased by EUR 100 million. Because this is one of the last calls of mine, not the last one, I hand over to Philip, who will do the major part of the presentation. Thank you, Rolf, and also a very warm welcome from my side. Moving to page four, familiar overview of the adjusted EBITDA and EBIT, as well as operating free cash flow. Let me add a couple of comments to put that into context. All four segments, as you can see, are up in a year-on-year comparison. For the adjusted EBITDA total, the growth translates into 12%. As expected, we lost a little bit of that performance on the way down to adjusted EBIT. That is obviously because of higher financing expenses, but we still delivered 11% growth or 10% on a per-share basis. Since I know that many of you keep a very close eye on minorities, I'm happy to report that the adjusted EBITDA growth after minorities was almost a percentage point higher than before minorities. The main moving parts between adjusted EBITDA and operating free cash flow are the higher cash taxes, and that comes from higher recurring sales volume, so disposal-driven, higher dividend payments to minorities because now we are seeing the full-year effect of those dividend payments for the first time. On the other hand, we had higher disposal volumes in recurring sales and cash in of some of our development transactions. The net effect is more than 50% growth in operating free cash flow. You may have noticed that we have also made small changes to the operating free cash flow definition, and that is to better reflect the cash flow from our four core business segments. One is the line item change in capital commitment, development to sell to more accurately reflect the actual cash flow from changes from the development to sell segment. Future cash-relevant changes in relation to our managed-to-green strategy will also be included in this line item for the time being. There is no impact. The other is the addition of the intercompany profits as the cash benefit, if you will, compared to outsourcing the work to third parties. Let's go through the four segments one by one, and I will start with the rental segment on page five. Here, in spite of about 10,000 fewer units due to sales, we still saw an increase of 2.6% in the top line as rent growth overcompensated the smaller portfolio. Maintenance was a touch higher as expected, and operating expenses were slightly lower, also helped by a smaller tax refund. All in all, we managed to preserve the top line growth on the EBITDA level for a year-on-year increase of 2.9%. The acceleration of organic rent growth in Q1 continued also in Q2, 4.4% overall, and 2.9% from market rent growth. Again, for the medium to longer term, we stick to our back of the envelope guidance of around 2.5% for the non-investment-driven rent growth. On a similar note, the 1.5% investment-driven rent growth is based on more recent investment volumes of EUR 1 billion, last year even less. As we look to increase this volume, you can expect a higher contribution on the basis of the operating yield of 6% to 7%, which continues to apply to our investment program. No need to dwell much on occupancy rate and collection rate as both remain exceptionally high and are expected to remain that going forward. Finally, fluctuation rate dropped a bit below 8%. It generally remains at low levels, and that is a function of the tightness in the markets in which we operate. Page six is the same analysis we've been showing for a few quarters now, only updated for H1. The point is quite simple. If you look at the spreads between the real market rents and our regulated levels, it's absolutely no surprise that the rental KPIs I showed you on the previous page are the way they are. They will continue to develop strongly because they are the consequence of the structural supply-demand imbalance in urban markets, giving us, and that is for me the key point, very, very good visibility on strong rental growth for effectively the next 10 years plus. Page seven on our value-add segment. Here, as you can see, both internal and external revenue is up double digit. As a result, overall contribution from value-add was slightly more than EUR 100 million, which represents an increase of 77% year on year. The main driver behind this positive development were the increased modernization and portfolio investments that benefited our craftsman organization. On top, we have also seen positive business developments, in particular on the energy side in a year-on-year comparison. Recurring sales, that is on page eight. We have sold slightly above 1,100 units in H1, almost 25% more than last year. Margins were also up to more than 29%. We are on a very good trajectory towards our ambition of a gross margin of 30% to 35%. This recurring sales segment will also be the segment where we will report earnings from the disposals of assets that we have managed from brown to green. Here, we have made the first small acquisition of a pilot project in Cologne. It's just about 130 units for an in-flat rent multiplier of 21 times. We will now do the modernization work and the energy efficiency improvements before we sell it back to the market at a multiple that we expect to be substantially higher and also based on higher rent following the green CapEx and the respective quality improvement of the building. Finally, on our development segment, page nine. As I explained in Q1, we have largely sold off our inventory and are currently in the process of refilling that pipeline with construction start of around 3,000 units this year. Much of H1 2025 disposals were land sales, and if I look at the reminder for this year, a meaningful contribution to the development EBITDA will probably also come from further disposals of land. The key focus for our development segment is the reduction in construction cost, as we have also dwelt into quite some detail in our capital markets day. The new government is working on some promising initiatives in our view to reduce cost, and we remain very focused on reducing the cost item that we can control. At the end of the day, that is what it's all about. The demand at the right price point is enormous, and the lower the construction cost, the larger the addressable market for a product that is in urban areas desperately needed. We have been making good progress on that front towards our target of around EUR 3,500, and that is all-in cost for new build. We have started the first projects in Berlin and Dresden, where we are or will be able to deliver new constructions at or even below these target costs. If you then look at our land bank locations, we are quite optimistic about the upside potential of our development activities. Much about the segments. Let's move to page ten. That is on valuation. The first six months brought a total value growth of our standing portfolio of EUR 1 billion or 1.3% on a like-for-like basis. If you look at the evolution on the lower left-hand side, you can see that the turnaround in asset values has been completed, and we are now on track to see rent growth translating itself into organic value growth based on our conviction. That is backed by market evidence year to date that yields are no longer expanding. As of June this year, we also had the initial recognition of the QBE Land Bank that we have acquired, and the debt-to-asset swap we reported with full-year 2024 results. We have made the initial recognition of the QB and Land Bank based on our conservative valuation approach, mainly relating to cost assumptions. That results in an impairment of around EUR 300 million in H1, plus a provision of EUR 85 million for part of the transaction, which has not yet seen closing. Netted against the value growth of plus EUR 1 billion, and the currency impact, the gross asset value at the end of Q2 was EUR 82.9 billion, up EUR 0.8 billion from year-end 2024. Nice development, as I said initially. Let's move to page 11 for the debt KPIs. The bottom line is that we consider our leverage well under control, measured by what the rating agencies expect us to be safe on our BBB+ rating with a stable outlook. Accounting for the transactions signed but not yet closed, our pro forma cash position is EUR 3.7 billion. Very comfortable in light of the upcoming refinancings. With the recent closing of the disposal of Deutsche Wohnen stock to Apollo, that position actually increased by EUR 1 billion. You will have seen the two convertibles that we have issued in May with a total volume of EUR 1.3 billion and a cash coupon of less than 50 basis points. We expect the annualized interest cost advantages to be around EUR 45 million compared to a straight bond. To be very clear, I consider convertibles, as I always said, as pure debt instruments in line with the Ts and Cs, and that is also how we have accounted for them in our balance sheet. Second, we also, as announced, completed another liability management exercise in June and bought back EUR 800 million across two bonds that mature in 2027 and 2030, respectively, running at slightly higher coupons than our current marginal cost of debt. When it comes to the three main debt KPIs, LTV was at 45.9% on a pro forma basis, accounting for the cash from disposals signed but not closed yet. The downward trend of this metric is very much intact, although we had the dividend payment that accounted for roughly 80 basis points increase in H1. Net debt to EBITDA was 13.7 times year two. The dividend payment was responsible for a 0.2 multiple points increase, but either way, that KPI keeps moving in the right direction. Different points in cycle require a stronger focus on some KPIs more than others, and we are at a point where our main attention moves from LTV to both ICR. Here, we are currently at 3.5 times, at the internal target threshold that we have set for ourselves. Based on our internal projections, however, we will be at this level or slightly better over the near and also medium term. While this KPI is currently the tightest one, we feel that it's also well under control. Let me also take the opportunity to again explain how we look at leverage. Our focus, as I said initially, is to make sure our debt KPIs are in line with the BBB+ rating criteria and a stable outlook. From here on, this is essentially an organic development as we expect values and EBITDA to grow and therefore to further move the debt KPIs in the right territory or even further. This may also mean that we may be better than the target corridor for a period of time. There will be market phases where we are better than the rating-derived target ranges, in particular for the net debt to EBITDA multiple this will apply. Last from my side on guidance, page 12. We essentially made five changes to reflect a higher ambition level in line with our good progress during the first six months and our general confidence looking forward. We expect both rental revenue and adjusted EBITDA total around the upper end of the original ranges. We are increasing our guidance for organic rent growth from around 4% to greater than 4%. The same goes for the SPI, which is now also greater than 100%. As Rolf said, we are increasing the range for adjusted EBIT by EUR 100 million. That is now EUR 1.85 to EUR 1.95 billion, which we expect for the running year. One more word on the rent growth, which is now greater than 4% for both the 2025 guidance and the 2028 outlook. To be clear, there is a material difference between these two because the targeted investment volume for 2025 is EUR 1.2 billion, and for 2028, it's EUR 2 billion. There is a substantial ramp-up in our investments, and it's safe to assume that by 2028, our organic rent growth with those additional investments will move towards the 5% like-for-like growth. One last word on the domination agreement with Deutsche Wohnen. As Rolf said earlier, the domination agreement between Vonovia and Deutsche Wohnen is now in place. This completes the Deutsche Wohnen integration, and we can now leverage the full potential of a larger scale going forward. As you will remember, in order to protect Vonovia shareholders, we have set up a vehicle together with Apollo that will hold 20% of Deutsche Wohnen shares so that the look-through stake that Apollo holds in Deutsche Wohnen is just above 10%. That vehicle is now in place, and we have received the EUR 1 billion cash from Apollo, which we can use to deliver and save interest cost in the magnitude of EUR 40 million per year. Because of Apollo's 10% stake in Deutsche Wohnen, our adjusted EBIT after minorities will be impacted by an additional 10% of Deutsche Wohnen's adjusted EBIT. An annual earnings impact of a little over EUR 50 million, and that is based on Deutsche Wohnen's expected EBIT for 2025. For Vonovia, this is then a small dilution of the adjusted EBIT per share after minorities of around 3%. This excludes any positive contribution from the saved interest cost thanks to the EUR 1 billion of cash from Apollo. If I move to a per-share basis, it actually does not really matter how many Deutsche Wohnen shareholders accept the exchange offer and change their shares into Vonovia shares. Here, a higher tender ratio means fewer minorities and more new Vonovia shares, and vice versa. A lower tender ratio means more minorities but fewer new Vonovia shares. These are essentially communicating vessels and therefore basically a wash with no impact on adjusted EBIT per share after minorities. Long story short, the minorities will continue to represent roughly 10% of adjusted EBIT. With that, hopefully, clarification back to Rolf for some concluding remarks. Thank you, Philip. Before we go to the Q&A, let me briefly summarize the relevant points from our H1 update. Market environment and operating business remain rock solid, like always. The rental segment is fully on track, like always, and we see a continued acceleration of profitability in our non-rental segments, which underlined the strategy 28. As a result, we are able to deliver stronger financial performance with double-digit growth in EBITDA and adjusted EBITDA. The positive H1 valuation confirms the turnaround for asset values, and the DPLTA process has been successfully completed, and Vonovia is now a fully integrated company. Going forward, we can leverage the full potential of this large scale and the advantage of our shareholders. That is why we have increased our 2025 guidance, and we are confident not only about the near term but also about the mid and long-term development for Vonovia. This is back to manage the Q&A to Rene. Thank you, Rolf and Philip. I'm happy to open up the Q&A. As in past calls, we will be limiting questions to two per participant. Thank you for your understanding. With that, Yusuf, if you can start the Q&A, please. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and then one on their touchtone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from said question queue, you may press star and two. Participants are requested to only use handsets while asking a question. Anyone who has a question may press star one at this time. Our first question comes from Valerie Jacob Bernstein. Please go ahead. Hi, good afternoon. Thank you for the presentation. My first question is about asset value. I just wanted to clarify that the annual value report of 1.3%—is it including or excluding CapEx? On the same topic, I wanted to ask, you mentioned some evidence on the market during the call. If you could share them with us, and if you're seeing any large transaction or large portfolio on the market at the moment, that's my first question. My second question is, thank you for the update on the domination agreement. I just wanted to ask if you could give us the ratio of people that have accepted the offer. I understand the acceptance rate. I understand that you said this has limited impact, but if you could tell us what that is. Thank you. Okay, Valerie, thanks for your question. I go through them one by one. The 1.3% growth is not accounting for CapEx. If you deduct CapEx plus some other impact, that will lead you to our valuation result of EUR 520 million. Including CapEx, we are roughly at 70 basis points growth. In terms of evidence in the market, looking at H1, we have seen a year-on-year increase of roughly 50% in transaction volume. That is comforting. Here, however, there are only a few larger transactions. I think in total, we have seen three transactions above the EUR 100 million threshold. By that, you can see it's backed really by a number of bigger transactions. What I always consider very interesting, and I think we've made that point also in the last call, is that typically the institutional market follows with some time delay the market for condominiums. If I look at the pricing dynamic in the market for condominiums, it's more than twice what we see in multifamily homes, and all of that are comforting signs. On your last point, the domination and profit and loss transfer agreement, we have essentially, I think it was last Friday, registered the domination and profit and loss transfer agreement. That is the point in time where theoretically investors can exchange shares into Vonovia if the banking system is already equipped to proceed that. Realistically, my assumption is that I not necessarily expect a lot of tender volume for now at zero soon because if you do the math and you look at dividend expectation on Vonovia adjusted for the exchange ratio, it's for the time being sensible, rational, in my view, for Deutsche Wohnen investors to remain invested in Deutsche Wohnen, given the guaranteed dividend of EUR 1.03, which is the alternative to exchanging their holding into Vonovia shares. Thank you, Philip. Our next question comes from Veronique Meertens, Van Lanschot Kempen. Please go ahead. Hi, good afternoon. Thank you for taking my question. Maybe first on the value-add segment, there was quite an acceleration in Q2. Is this sort of like a more normal run rate, or can we even see a further acceleration throughout the year and the years to come? Yeah, this is a normal acceleration. You know we want to go to 20% to 25% of EBITDA. We are now not there yet, but all our programs, which we carefully follow, are guiding in the same direction. I think this is a proof point that we are coming, I think, now from 9% last year to 15% this year. We are on the right way. As announced in the Q3, we will go on and this will come to 20% to 25%. Specifically, I meant sort of like you saw the Q2, the EBITDA contribution was already significantly higher than Q1. Is that normal run rate for Q3 and Q4 as well? I would not go now from quarter to quarter exactly. I think you should look at a little bit longer term, but it will go up. Do not do the run rate quarter by quarter, because then we would be ending much faster than 2028. The objective is 2028 is 20 to 25%. Okay, clear. Thank you. Maybe, Philip, one follow-up on the domination agreement. It went a bit fast, so I didn't fully understand, but the guaranteed dividend distribution to Deutsche Wohnen holders, which line should I actually see that? Is that sort of like reflected in the minorities line after EBIT? Correct, yes. Deutsche Wohnen shareholders, again, as a reminder, have two options. They can either remain invested in Deutsche Wohnen shares, in which case they will receive a guaranteed dividend of slightly above EUR 1 per share. That number for the outstanding shareholders you will find in the cash distributions in the operating free cash flow and accounting-wise in the EBITDA post minorities. The alternative is that they can exchange their shares at a ratio of roughly 0.8 into Vonovia shares. You find it in the EBIT before minority or after minority on the per-share basis, right? Okay, that's clear. Thank you. The next question comes from Robert Jones, BNP Paribas. Please go ahead. Hi, team. Just one following up on the domination agreement. Just so I understand it, if I'm a Deutsche Wohnen holder, as you said, I've got two options. I can either go for the exchange, it's roughly 0.79 Vonovia shares for a Deutsche Wohnen share, or I can go down the route of getting the cash option, which is just over EUR1 post-tax. If I go for that cash option, does that mean if all the remaining Deutsche Wohnen shareholders went for that option and didn't go for the swap into Vonovia shares, do I need to model an incremental cash outflow or an EBIT post minorities outflow compared to what is currently the kind of pro forma situation, if you will? I'm just trying to think in terms of my forecast for FY2025. The second question was in terms of Divvy, appreciating it's 50% of EBIT plus surplus liquidity. Remind me how you calculate or think about that surplus liquidity element of your earnings so I can think about that for the full year. Thanks. Not sure I got your first question right, but essentially, you will find the EUR 1 guaranteed dividend in the operating free cash flow in the line item dividends and cash payments to minorities. That is purely a function of a tender ratio. If I'm right with my assumption that there is going to be a little tender ratio, then based on roughly 60 million minority shares, it's up to EUR 60 million of cash burden in a given year. Between zero and EUR 60 million, depending on the tender ratio. That is also the line, if you will, which ultimately impacts the excess liquidity for distribution. Just a cautious note on that topic, keep in mind that we are significantly scaling up our investment volume. My assumption that there is a lot to expect for in terms of excess liquidity is probably an aggressive one. At least over time, the dividend will move towards the 50% of EBITDA. Okay, very clear. 50% of EBITDA. Thank you. The next question comes from Thomas Rothaeusler, Deutsche Bank. Hi. A couple of questions, or two questions, sorry. The first one is on your opt earnings guidance. Maybe you could provide some color on the key drivers there. The second one is on development, the development segment. I mean, most of the operating profit in the first half was driven by a one-off sale of a land plot. Just wondering, by when do you expect more meaningful underlying contributions there? The development, to be very clear, we have a land bank because of the history coming to use Deutsche Wohnen, Waterbank, and Bubok Land Bank. The land bank is too big, and that's why we are well advised to reduce the land bank by disposing land. This will continue, and this will generate profits, which you will see. As Philip said, at the same time, we are now building up and constructing new buildings, filling up the pipeline. Part of them you will see immediately in the result, and part you will see, especially if it's block sales, in the moment we are selling it. This brings the development back on track. Don't forget, we need to sell land because we have too much land in the moment. Yeah, and to your first question, Thomas, what are the key drivers of us upping our guidance on EBIT By EUR 100 million, roughly a third is interest saving, and that is very much a function of the convertible bond. I was referring to an annualized impact of EUR 45 million. Adjusted for issuance in May, it's slightly above EUR 30 million. The remainder is basically across all segments with a strong, strong focus, however, on the rental segment where rental growth exceeds our expectation. That is what you also see in our opt guidance, if you will, in terms of EBITDA total and rental revenue, where we are moving towards the upper end of the range in the tightened guidance, if you will. Thank you. The next question comes from Bart Gysens, Morgan Stanley. Please go ahead. Yeah, hi. Good afternoon. Two questions for me, please. Firstly, on the development segment, I appreciate some questions have been asked already, right? Given this is such a crucial part of what you're doing, you clearly talk a lot about we want to grow the net rental or the non-rental EBITDA. Can you help us a little bit and understand kind of what is the how big was this land plot going from EUR 70 million to EUR 209 million? Maybe for us, and I think for the market, it would be more helpful if you actually split that out a little bit more in detail, to say like what are the margins we make on development to sell? Selling a land plot is not really development to sell. A long way of asking, can you split the EUR 209 million by land sales and by actual home building? What was the margin on your home building? That would be my first question. We will get to you in a second, just because it's a complex question you ask. Just to be clear, the value, the development piece is one piece of our non-rental business. It's not the major piece. That's why I just get this in context. The cost in the moment is coming actually from the customer organization, from the heat pumps and all these things. Just to make it in perspective. Now I hand over to Philip to give you the detail or give you some better answer for the development financials. Yeah, just to add on that, I think we've been giving longer-term guidance of what we expect from our development business. That is that we move back towards an annual investment of EUR 1 billion with the expectation of achieving gross margins of 20%. What is currently different is that by managing the crisis and deleveraging the balance sheet, we have essentially sold our entire inventory, so there is nothing which is ready to sell because it's sold. At the same time, we have seen our land bank increasing fairly significantly, and that is essentially because of the full integration of Deutsche Wohnen. In other words, in our view, we have too much capital tied in the development space, which is why we are selectively selling land plots, which is fulfilling two goals. One is to reduce capital deployed, and two is to bridge the profit delta between now and when the projects we are now starting to build are actually generating or starting to generate EBITDA. Again, medium term, and that should be your expectation, is that we are targeting gross margins of 20% for annual investments of EUR 1 billion. If you deduct the cost of the platform of, let's call it, EUR 40 million, we are targeting roughly EUR 160 million of EBITDA from our development business. All right. My other question is on the Deutsche Wohnen integration. It sounds very good that you can lever the full potential, but I don't know, maybe I'm not smart enough to understand it. Can you give me two or three things specifically what that actually means, levering the full potential? What are the first two or three priorities for Vonovia now that you've got full control, the full range of Deutsche Wohnen? What are you going to do? The biggest is, as you know, Deutsche Wohnen is still subcontracting a big part of the craftsman organization to B&O. This will now be integrated fully in the VTS, which will generate actually the margin B&O is doing today, and they are charging a higher price than our internal price, which we are charging with our VTS. This will lead actually to more profit and a bigger VTS, which will generate more EBITDA and more value in the whole Vonovia group. The next one is, of course, cash pooling. We now have no issues with moving cash around, so the cash blocked in the Deutsche Wohnen is over. These are two major things. If we are coming bigger, I would advise you to look on a figure which we are looking now in the sense of the second Vonovia, which is the gap between cost-asset yield and net-asset yield. There you see a big difference between us and our peers. We are consuming much less. The reason for this is because we have higher purchasing volume, we have higher scale. That's why we can buy better. Things like Copios, where we are actually building the new buildings on Deutsche Wohnen plots, also contribute to the value. The story which we started, I think, with the first integration will go on. Now it is clear because we have no governance issues anymore between Vonovia and Deutsche Wohnen. This is in the guidance, right? The better efficiency than the VTS integration is in the long term. This is in the long term, 2028. You will not... VTS, to be clear, these are 1,000 craftsmen, and this is not coming from one day to the next. You have to build the 1,000 craftsmen. That's why it's like you're always seeing it will temporarily improve the result. I refer to the Deutsche Wohnen merger. This was the same as if Deutsche Wohnen and Gagfa merger. In the two following years after the completion of the mergers, you have seen a significant reduction in cost per unit or in yields. This is a factor. It does not come immediately, but it comes over time. You will see this also, for example, for the VTS case in the next two or three years. This will help us for the 2028 objective. Great, thank you very much. The next question comes from Manuel Martin, ODDO BHF. Please go ahead. Thank you, gentlemen. Two questions from my side. The first question is on the rental increases. According to a survey from Kieler Institute for Weltwirtschaft, they were saying that offering rent increases have been slowing down in the second quarter. This seems to be a bit in contrast with your very strong points in your rental business. How do you see the rental market evolving, and are you decoupling from the general market with your investment program? The Kieler Institute is probably... You have to be very careful. This is offer for new letting rent, which are beyond any legal framework anyhow. This is nothing which is in the legal framework in the mid-price branch. We have seen today also, just today in the German newspaper, an analysis which is done in saying rental are growing at 40%. These are all the official Angebot in German. We are saying Angebotsmieten. This is what you see in the internet. This is all above what is legally allowed. What is legally allowed, I think Philip showed it to you. If the Angebotsmieten is going a little bit higher or lower, it really doesn't matter. It is very clear that for the next 10 years, we will see, especially in the big cities, an imbalance of supply and demand and massive pressure on rent. We will do the legally possible, which will lead to our rental guidance. The legally not possible, it's much bigger. We will not do it because it's legally not possible. There are others out which are charging EUR 20 and more in Berlin, while we are charging for the same apartment EUR 11. Just to add, Martin, if you look at page six of our presentation deck, we have shown the market reality across Germany of almost EUR 16 per square meter. That is where this slowdown in growth is referring to. Historically, we have seen asking rents growing twice as fast as deregulated rents, and the discrepancy, which is today 100%, is now kind of hopefully starting to shrink a bit. This might also be the case because probably more people are deciding to be legal. Okay, I see. Thanks for that. My second and last question, it's a bit on the balance sheet, on the financials. I saw that there was an impairment loss of approximately EUR 340 million in the first half year on project developments. Maybe you can elaborate a bit on this. What's standing behind, and could we see more such impairments to come? Yeah, that is what I briefly addressed in the presentation. We have restructured our equity participation quarterback last year. In that context, we did a debt-to-asset swap. With H1, we, for the first time, based on closings, recognized these acquisitions, these swaps, if you will, and applying our more conservative assumptions, in particular on the cost side, that resulted in that impairment. To your second question, do I expect more to come? Clear answer is no. I think we have taken here on purpose a very conservative stance. Left and right, as we have discussed, we see markets moving in the right direction in terms of development of property values. To be very clear, if we manage, as we can show you now in the first project, to get the construction cost down, this has, of course, a positive impact on the valuation of the land plots. Okay, very clear. Thank you. The next question comes from Simon Stippig, Warburg Research. Please go ahead. Hi, team. Thank you for the presentation. Two quick ones from my side. First one is in regard to your sales. You mentioned around EUR 1.7 billion signed but not closed. How many of those were signed in the last fiscal year 2024? Are those on track, and when do you expect those to be closed? The second one would be, you mentioned in the rental segment that fluctuation rate decreased. Is there any particular region where you can say that dropped a bit more, for example, in Berlin? What do you expect going forward? Do you expect this to continue to decrease? Thanks. Yes, I mean, on your first question, that EUR 1.7 billion, that applies to transactions. All of them signed have seen signing in 2024. One has seen signing early 2025. Now, when do you expect the money to come in? Today, it's not EUR 1.7 billion. Today, it's just EUR 700 million left because we have seen meanwhile closing of the disposal to Apollo of an economic stake of 10% in Deutsche Wohnen. The remainder of EUR 700 million is predominantly related to our nursing home portfolio, which was sold to the city of Hamburg that will see closing in September. HIH, those are the development packages, if you will, which have been sold last year. Those will see closing partially in this year, partially next year. It's only, I think, some 10% which will see closing beyond 2025. You will see that the pro forma numbers and the true numbers are moving very close to each other. Hopefully, very soon, we can skip that additional layer of information and just report it as is. On your second point, in terms of fluctuation rate, look, I mean, it's as low as we have ever seen it. It's very much a function of, yeah, in that number, I think you can see that regulation, as it were currently, is actually not working because it has an embedded incentive for people not to move. Our assumption, however, is that this rate will remain at that low level for the foreseeable future, as we equally do not expect that the supply-demand imbalance in our market will disappear anytime soon. We, however, also have not the expectation that that fluctuation rate will come under significant additional pressure and move down. To be very clear, the normal fluctuation rate you should expect in normal markets should be somewhere around 10% and plus, because just of death rate and normal change in employment and moving your normal movement. Being significant below 10% actually shows what Philip explains, but also shows that there is an issue of illegal subletting also in our portfolio. We are working on this because it is not fair that somebody is renting an apartment from us for EUR 11 and netting it out for EUR 21, which happens today, which is illegal. We are working on this also with technology. Okay, thank you. The next question comes from Andres Toome, Green Street. I had two questions, I guess. Firstly, hitting on just operating expenses, you mentioned that there was, I guess, a one-off tax impact there, which is helping the operating expense line. I was just wondering, can you provide perhaps any general comments about underlying organic expense trends for how you see it near and medium term? I guess especially thinking also about staff costs as minimum wages, I guess, are expected to jump quite a bit in Germany. First of all, minimum wages are relevant for our gardening division, but this is a pass-through item. This will automatically be compensated by higher fees to the tenants. The craftsmen are above the minimum wage level, so this is not an issue of the minimum wage. In general, you have seen that with our scale, we managed in the past to manage down inflation by efficiency. This should go on in the future, especially if inflation is going down in the moment. Yes, others will see increasing operating expenses. Our target is to manage it down by more efficiency. This comes back to the question beforehand. What happens if you now have full integration of Deutsche Wohnen and Vonovia? Understood. My second point would be about the sales market generally. You have two business lines. Firstly, recurring sales, which seems to be rebounding with volume, especially in the first quarter, and then with pricing seemingly in the second quarter. In development to sell, you sort of said that you don't have much projects ongoing or at least in the completion stage. Just wondering, is there any sort of different trends that you're observing there in terms of existing sales to the condominium market and new build apartments? Is it actually the case that with the new builds as well, as you're doing pre-sales, the demand seems to be good? The demand is enormous because if somebody wants to live in a city and he does not find a rental apartment, actually, the only option what he can do is to buy an apartment, a used one, which is for the lower price, and a new one for a higher price. We see enormous demand, and we will see because we are not the only one who has followed the strategy not to start new construction and to sell everything what you have. We have seen a lot of bankruptcy of big developers in Germany. The shortage of availability of apartments to sell is enormous, but there's just no product. That's why there's not an issue of demand. It's an issue of supply. Very clear. I get it. The delay, it just takes you two years. The buildings we are starting now will be ready in two years, in 2027. Of course, we are selling some of these apartments beforehand, and then we recognize also some EBIT in this. The availability of new apartments is close to zero in Germany at the moment. Understood. Just a quick follow-up, I guess. You are sort of starting new projects en masse now. In 2027, we should start to see more of those sales flowing through. To be very clear, we are in the apartment, in the condo sales, we can recognize sales effects even if we are selling it in 2026. The project is not completely finished, but you are also recognizing some revenues and then some EBIT. This will not be 2025, 2026, and then 2027 upwards. The reality when people can move in in the apartment is more on 2027. For example, it is a little bit more complex. Also, to make clear, for example, the two buildings we are building now in Berlin, as I mentioned, with this Copios, they will be finished much earlier because they are serial construction. This will probably be filled with tenants at the end of this year, at the end of this year, or even probably middle of next year. This is not just 2025 and 2026, nothing and 2027, everything. Understood. Thank you. The next question comes from Thomas Neuhold, Kepler Cheuvreux. Please go ahead. Thanks a lot for the presentation and taking my questions. I have two quick questions on disposals. Firstly, which portion of the EUR 1.5 billion non-core portfolio left do you plan to sell this year? The second one is on the development land bank. You mentioned it's too big. Which portion of your development land bank is potentially up for sale and what is a realistic timeframe for land bank disposals? Thank you. Thomas, to be very clear, you are asking for the speed of non-core in both questions. It's non-core land and non-core assets. We are not actually setting out a timeline, a strict timeline. We are selling to optimize the price and not necessarily the volume. The time where we have sold assets to delever the balance sheet is over. We are optimizing price, and that's why it would not be wise from our side to give you a target. Of course, you can be assured that we are selling it for a reasonable price as fast as possible. Okay, but can you maybe give us an indication which portion of your development land bank is up for sale? By how much is the land bank too big, you think? On that point, Thomas, no guidance. The market for development or for the disposal of land bank is a tight one. I think we are very well advised not to bump that into the market at a point in time where we truly think that we currently see trap valuations. In terms of non-core, we can be probably a bit more specific. Beginning of this year, we have been talking about EUR 1.6 billion of non-core. We have set at roughly half of that. Hopefully, by the end of this year, the other half by the end of next year. This remains the target, but to reiterate what Rolf said, subject to appropriate pricing also for the non-core product. Understood. Thank you. The next question comes from Paul May, Barclays. Your line is open, Mr. May. You may proceed with your question. Hi, guys. Sorry about that. Some technical issues on my side. Can you hear me now? Loud and clear. All right, just a couple of questions. Hoping you can help me with your minorities methodology, just getting the difference between that which affects EBIT and that which affects the OFCF. Obviously, quite a big difference in the number in the first half. I appreciate there's some timing issues. Which is the more relevant, effectively, to understand the economic impact on Vonovia? Is it the cash distributions, or is it the minorities, the EUR 85 million, or is it, as I say, the EUR 175 million? Just to get a better understanding on that. Moving forwards, will we continue to have such a big differential between those two figures, or will they converge either towards the higher or the lower? Those two numbers is the sort of first question. The second question is, I appreciate, obviously, you changed your KPIs. I think a lot of investors still look at the old KPIs as best as they can, given they are impacted by post-tax numbers and so on. Just noting your FFO on a sort of an old definition was up by about 3% per share. AFFO is actually down quite materially year on year, just going by sort of old definitions of how one would look at things. I just wondered whether you had any views on that and whether that was influencing some of the changes in the KPIs. Thank you. Yeah, Paul, on your first question, I think it kind of depends on you, what is more relevant for you, the accounting EBIT or the cash, sorry, the accounting minorities or the cash minorities. The difference really is what is actually being paid in cash to minority shareholders. The biggest discrepancy is because of the apologies. Here, the cash share is higher than the accounting share because we pay the disproportionate share of the net cash flow as a dividend to Apollo, which, however, as a reminder, is protected by a call option we have on our hand, which is capping the IRR, which we have to deliver to Apollo to initially 7% over time up to 8%. For me, more relevant, I'm a cash guy, is the operating free cash flow and the respective guidance we have given on that front. Now, on your triggered discussion on old versus new KPIs, just as the reminder, I mean, comparing our business to those of peers, it's more complex because we have a value-add business, because we have a development business, we have a recurring sales business, and that impacts cash flows where the old FFO is not an appropriate metric to capture that. If you look on the tax side, I think it is important to remember that part of the cash we pay to tax authorities is driven by disposal activity. If I look at our cash taxes, if you will, based on our pure rental business and making that comparable to also the peer universe, the rate vis-à-vis EBITDA. Roughly 4%. Keep in mind that the higher the investment volume, the more beneficial it is to us because higher investments based on tax accounting are not going to be capitalized to a very, very large portion. In other words, it's reducing the taxable income and it's essentially saving tax. The bigger portion, slightly above 5%, is because of disposals, where essentially, if I look at recurring sales, a certain portion are monetizing the value uplifts we've seen in the past by the sort of tax liabilities which are counting against that. Sorry for my ignorance here, the reason the tax has increased here, I think you seem to indicate that these would have a sort of beneficial impact on one hand in terms of reducing the tax benefit. Sorry if I misheard that because tax has gone up obviously quite materially year on year. The tax is going up because we increased significantly our disposals, but disposals also positively impact our operating free cash flow because we are monetizing also on the embedded asset values, and as part of that, also addressing deferred tax liabilities. Paul, in reality, a big part of the tax is deferred taxes, which are paid out because the assets are sold, and that's where the deferred taxes are realized. Yep, it's the value growth which is inherent with that, because of which deferred tax liabilities have been created. Yeah, got it. Thank you. Yep. The next question comes from Pierre-Emmanuel Clouard, Jefferies. Please go ahead. Yes, good afternoon. Thank you for taking my question. The first one is coming back on your overarching cash flow calculation and I'm trying to assess where it could land by the end of this year because there is a lot of moving parts. Actually, the working cap played a big role in H1. If you can drive it through, your expectation in H2 would be useful as well and also on the dividends paid to minorities. Roughly, a ballpark figure would be useful to see where it would land. This is my first question. Yeah, I think on the operating free cash flow, we have actually guided that it will be, ignoring the impacts of movement in the working capital, just a notch below last year. Now, if you look at H1 numbers, you can see that we have positive movement in the working capital of roughly EUR 350 million that will not go away. It will be a very, very decent number as a result of that. In terms of cash dividends, not much change, I would argue, towards what you've seen in H1. We have seen the full year impact in terms of Apollo JVs. The EUR 80 million times two is what you can expect for the entire year. You have EUR 40 million of the usual payments to Red Blocker as they've been guiding towards, and you will additionally see, but that's also no news, the EUR 70 million based on the dividend we pay for the 10% economic interest in Deutsche Wohnen to the Red Blocker we have installed in preparation for the domination and profit and loss transfer agreement. Okay, that's clear. My second question is a technical question. On your financial results, can you remind us what are the accrued interests of EUR 132 million and if they are included in your ICR calculation, or if they also are included in the calculation of S&P and Moody's? In ICR, we look at cash payments, so do the rating agencies. Okay, should we expect this figure to move significantly going forward? To the extent we refinance, I mean, we have average debt cost of 1.8%. Our marginal cost of debt secured as unsecured is for 10-year tenors slightly below 10%. Unless we issue more convertible bonds, our marginal cost of financing will be higher and you will see the expense line for interest cost gradually increasing over the next five, six years. Okay, thank you very much. Ladies and gentlemen, that was the last question and this concludes our Q&A session. I would now like to turn the conference back over to Rene Hoffmann for closing remarks. Thank you, Youssef, and thanks everybody for dialing in. As always, any follow-up questions, you know where to find us. That concludes today's call. Stay safe, happy, and healthy as always, and speak to you soon. Bye-bye. Ladies and gentlemen, the conference is now over. Thank you for choosing CORESCO, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.