Branicks Group AG

Thank you, operator. I welcome everybody to our full year results presentation for 2024.

This call will also be webcast live on branicksgroup.com and a replay of the call will be available on our website shortly after the end of the call. Our CEO and CFO, Sonja Wärntges, will now give you an overview of our financials and our guidance.

After the presentation, we will be happy to take your questions. Please note that management comments during this call will include forward-looking statements which involve risks and uncertainty.

For discussion of risk factors, I encourage you to review the Safe Harbor statement contained in today's presentation. As always, all documents relating our full year reporting have been made available on our website.

I now turn the call over to Sonja Wärntges for her remarks. Sonja, please.

The floor is yours.

Thank you, Jasmin. Good morning, ladies and gentlemen, and also a warm welcome from my side to Branicks' Q4 and full year 2024 results conference call.

Today as usual I'm joined by my colleagues from accounting and investor relations. I will give you an overview on what has been achieved in the last year and I will present you our key numbers as well as an outlook for 2025.

At the end, we are open for the normal Q&A session. Dear all, in terms of a rough overview about what we have delivered so far, I would like to highlight the topics mentioned on Slide #2.

First of all, we achieved major milestones in terms of our financial consolidation and the reduction of our liabilities. Also, the last €40 million tranche was only due end of December.

We already fully paid back our bridge financing for the acquisition of VIB in October. This financial instrument initially amounted to €500 million and we have growth having achieved a complete payback as an important milestone in our financial consolidation.

Our focus remains on further reducing our liabilities with a continuous focus on our covenant as well as on our liquidity. Looking ahead of us, the cornerstones of our future are defined and approved in a solid plan laying the foundation for shaping the company in the future.

With regards to our disposals, Branicks was a very active participant in a challenging transaction market in 2024, selling 57 properties for a combined €702 million. Following the original expectation that the market would not pick up again until the second half of the year, Branicks can look back on a very satisfactory transaction performance in the reporting year.

Including the transactions in the fourth quarter, we reached our €650 million to €900 million disposal target. And I can promise to you that we are in a very final stage to sign further disposals.

Our transaction pipeline is fulfilled and our transaction team are working successfully in order to realize the deal. With regards to our commercial portfolio, it continues to be a sustainable cash flow provider.

Our clear strategic focus on the two asset classes, office and logistics, is once again reflected in the high percentage rate, these two asset classes constitute with regards to their market value. Our portfolio continues to generate stable and predictable rents, benefiting from the realized rent indexation.

Compared to the prior year period, we saw a slightly higher like-for-like rental growth, where we particularly saw strong renewal letting. We also managed to increase the average rent from €8.92 per square meter to €10.20 per square meter.

In this context, I would also like to mention that our teams continue to successfully negotiate new lease agreements, like most recently to MyWellness GmbH in the HELIO as set in Augsburg or [indiscernible] in the Zircon Tower in Wiesbaden as well as the new lease agreement in Neustadt, Halle that we have also communicated via press release. With €8.8 billion assets under management, our institutional business remains the second strong pillar of our business model, recording a 2.3% like-for-like rental growth during the reporting period compared to prior year.

Thanks to our strong and solid setup, within this segment we are ready to benefit from a market upswing particularly with regards to increasing transaction fees. And last but not least, we saw solid progress regarding our performance 2024 action plan.

Besides from the continued OpEx reduction mentioned on the slide, we also saw progress on the other points of this program, for example, the mentioned reduction of liabilities, the realization of disposal, and the concentration on the operational portfolio business. With regards to our financial maturities profile, we set the course already in the first quarter of the business year when the lenders of the 2024 promissory note loans amounting to 225 million voted in favor of the company's restructuring plan.

In doing so, the promissory note loans in question [ph] were extended to June 30, 2025. Another major milestone in the first quarter was the agreement with the lenders of the bridge financing for the acquisition of the shares in VIB Vermögen AG completed in 2022 regarding an immediate repayment in the amount of €40 million and an extension of the term concerning.

It’s the fund still remaining €160 million until end of 2024. The extension had been achieved on almost unchanged conditions.

Since then, we were able to pay back €40 million at the end of Q2, as well as €80 million in Q3, and the remaining €40 million in October 2024, and therefore saved the interest. With regards to our bank debt, we refinanced 2024 all maturities due with good conditions.

And also in Q1 2025, we achieved to pay back €4 million bank debt and rolled further back financing of €27 million to 2030 and later. Again a promise we delivered.

And in addition to that, we managed to convert €20 million bank debt maturity from 2025 to 2030 and later. And we also already successfully achieved a pay down of our promissory notes ahead of plan.

In January, a first amount of €50 million had been paid back and they can count on us that we will pay back the outstanding amount. Let me highlight that in 2024, we successfully reduced our financial liabilities in total by €667 million to €2.3 billion, which is a clear sign of our strength.

[Indiscernible] of our €400 million green bond, which is due 22nd of September 2026. I know that most of you are eager to learn about more -- to learn about more about our plans.

Please be ensured that of course we have this maturity in our heads and exploiting different options in this regard. Nevertheless, it is too soon to talk about concrete steps.

But let me underline that our focus to deleverage our balance sheet while monitoring our green bond covenant remains one of our highest priorities, and clearly said, we intend to meet all obligations due in 2025 and beyond as planned. With 57.8%, the bond LTV covenant should have peaked and is expected to improve due to disposal and a further reduction of our loan.

We are aiming to reduce our LTV further and to achieve an even bigger hedge room in the mid-term. With 2.0, the ICR covenant had also enough hedge room [ph] to the 1.8 threshold and we are confident to keep our interest cover ratio stable and of course above the 1.8 threshold.

In terms of our average interest rate, it is important for me to underline that over the course of the quarter and due to the redemption of the bridge as well as due to additional optimization, we continuously improved this KPI during the recent quarter from 3.36% as of end of March to 3.21% as of end of June to 2.81% as of end of September to now 2.67%. One important element here is our ability to successfully agree financing conditions for our development projects as well as for our real assets.

Having said this, let us now focus on our 2024 results, starting with an overview of our key performance indicators compared to our guidance given at the beginning of last year. As you can see, we have delivered on them.

And I think it is worth adding this particularly our disposals result is remarkable given the challenging conditions on transaction markets. Let's now take a deeper look in the results of our real estate platform in 2024 shown on Slide #5.

Our like-for-like rental income remains strong and our teams once again performed exceptionally well. The like-for-like rental income rose by 1.8% for the entire portfolio under management.

In the commercial portfolio, this year's slight increase of 0.3% and a plus of 2.3% within our institutional business. In terms of square meter, the leading performance of the Branicks platform in 2024 declined by 13% year-on-year to 387,700 square meters, mainly due to disposal.

In total, assets under management with €11.6 billion were slightly down compared to last year, mostly due to disposals which became effective in the course of the year. The commercial portfolios saw a decrease from 3.6 billion to 2.8 billion, which was a direct result of the disposals activities year-on-year.

The institutional business was mainly affected by the evaluation. As of today, only 3.7% of the total annualized rental income would expire in 2025 if lease contracts are not prolonged.

Over 85% of annualized rental income has a lease length until 2027 and longer. For larger expiries in 2025 and 2026, we already proactively started discussion with these tenants.

On our next slide, you can see the development of our main income streams. Net rental income fell to €150.2 million, mainly driven by the selling.

Income from associated companies that mainly consisted of deferred income from fund shares decreased to €5.9 million. The real estate management fees slightly decreased from €50.9 million to €48.2 million.

Apart from recurring asset property and development fees, this number also includes fees generated from transactions that occurred as part of the settlement of the global power mandate. Our income from rent and management fees on the platform with €198.4 million was slightly lower year-on-year, nevertheless still showing a very high degree of recurring income streams.

Now let's take a closer look on the development of the FFO year-on-year. Overall, in line with our guided expectation from that upper end.

The net rental income saw a decrease of €14.4 million due to the disposal. Management fees decreased by €2.7 million and the share of the profit from associates by 0.5 million.

Our adjusted OpEx development again had a positive contribution to our FFO. This is adjusted by €6.1 million mainly due to legal and advisory costs in respect of financing activities.

The increase of our adjusted net interest result amounted to €8.6 million. This was adjusted by nonrecurring expenses amounting to $26.6 million due to refinancing activities for bridge and promissory notes.

In total, and to sum it up, we see the FFO amounting to €52.2 million for the full year of 2024. This is exactly within our guidance range.

Moving to Page 8, you'll see that within our commercial portfolio, our ongoing optimization of the portfolio continued during the reporting year. Our two strategic asset classes, Logistics and Office, now account for 83% of the market value of the commercial portfolio.

The EPRA vacancy rate was slightly up year-on-year, mainly because of the end of some bigger rental contracts. There off, three are already rented and taking this into account, we would see a number of 6.5%.

The vault remained at a high-level. Compared to former years, what we lined out on our page 9, our key performance indicators remained very solid.

Our balance sheet portfolio leads to a robust annualized rental income and higher square meter prices. Our long-term efforts and achievements regarding letting activities support our levels of vacancy rates and our vault.

Another core element of course remains our Institutional business. The split of our assets under management in this segment on Page 10 shown also demonstrates our focus on the asset classes, office and logistics.

Our investment partner basis here continues to be well-balanced without any dependencies from single mandates. Branicks currently manages 29 vehicles for a total of 171 institutional investments.

Let me now also take the opportunity to highlight some of our project development of VIB. We are particularly proud to see that we not only realized successful disposal, but also creating new asset value within our development pipeline.

As you see, all of them will be completed until 2026. We have been successful in letting the new spaces, especially with our largest project in Erding and Ingolstadt.

All projects mentioned here will have a total investment of more than €200 million, generating a targeted rental yield of approximately 6%. And due to the market conditions, I'm convinced that the strategic and operative setup that I have presented to you during the last minute is the right setup to ensure our success in the expected market environment.

With regards to the office rental market, we share the optimistic view of JLL. We expect the trend towards a high-quality office space, accompanied by a trend towards small yet sophisticated spaces.

All these things we can offer. Germany's logistics rental market is expected to remain stable in 2025 with a significant increase in take up likely on the event of a strong economic recovery.

However, both prime and average rents in the country's top markets are anticipated to see a slight rise over the course of the year. As I have mentioned before, we see a growing importance of sustainability topics in all asset classes.

Although stress factors remain and the market continues to pose challenges, we expect an overall positive market influence, especially a brighter investor sentiment and prospect a further interest rate cut. In view of our expectations for the current business year, we expect gross rental income in the range from €125 million to €135 million, real estate management fees between €50 million and €60 million and then FFO I after minorities and before taxes of 50 to -- €40 million to €55 million.

With regards to acquisition, we foresee no acquisition for our on balance sheet activities and €100 million to €200 million within the IBU segment. Our disposal guidance lays a range of €600 million to €800 million, whereas €500 million to €600 million in our commercial portfolio and €100 million to €200 million in our institutional business.

Beyond our guidance for the current year, our mid-term ambition remains unchanged. We strive to transform Branicks Group towards a profitable ESG-focused and value-generating asset expert with sustainably strengthened cash flows and financial position.

Our ambitions are clear and we are working hard to achieve them. We will substantially improve our earnings and cash flow and therefore the LTV towards 50% and return to net profit in 2026.

In doing that, we want to monetize our ESG expertise. And we have a clear mid-term ambition to further reduce our debt, which will go along with improving the respecting KPIs.

And having said that, I would now like to hand over to the moderator for your questions.

Yes. Good morning, Sonja.

Stefan here from SRC. My first question is about you have a bit of a rising vacancy rate in your commercial portfolio.

It's from 5% to a bit more than 7%. Perhaps you can say a bit more about the office market.

I think this is still on a sluggish level. It's not easy in terms of letting performance and also not easy in terms of transactions.

What you expect here for the rest of this year and also what you expect for next year? And said this, the economy is still very difficult and we might get the third year of recession in Germany.

And then my second question is, you still have a strong focus on further deleveraging and you showed some good success for your debt profile already in the first quarter. What about the financing conditions here?

And you think the new Merz government will lead to a higher overall interest level perhaps.

Good morning Stefan. Thank you for the question.

So I said our EPRA vacancy rate is 7.4% and this -- yes, according to some end of contracts last year. So therefore as I explained in my presentation, we have also got three new lettings, so to say, concerning to the three letting constructs which are the most square meters in this vacancy rate.

Now this is mainly in Halle, driven by REWE and Smyths Toys, and it's in Tirkontau in East Baden with Lilly, the pharmaceutical concern there, and if you take this into account, you would say it's around about 6.5%. And so I think we are very good in this letting area.

We have two other contracts we are in discussions now, so I have a good feeling, so to say, about the rental expectations and the success. It is difficult to do this, so you are totally right.

Mainly driven by international companies, which have also the ESG aspect and their leasing contracts and so on. But at the end of the day, we do not see that the interest is coming down.

And as said, also speaking with JLL, we have the two major points here. The one is big spaces on a comfortable level and the other one is highly sophisticated small places.

So it's the total market which we see is in the -- in question, so to say, as we can offer both. So I think it's only a timing effect here.

So the last question, the interest rate, I don't think that the ambitious challenges Merz is discussing now will lead to an increase of interest rates. It's my personal opinion, but I don't think that it will work in this way.

So I think we will be stable with the last change during the last weeks. I think we will stay on this way, but I don't see it as a major point here on our business in the real estate world.

I don't think it is mainly driven during the next 12 months from the interest rates. I think there are a lot of uncertainties and a lot of questions and with the transaction market and also the letting market mainly driven by foreign international investors and companies.

This is an international aspect which drives the real estate market here. Can you repeat the second question?

That was the second question. That was fine.

Just you expect some recovery in the office market. According to my data, the office market was still behind, let's say, logistics and even still behind retail in the last year, there was a small recovery in office, but not really a broad recovery.

What do you expect here for this year?

Do you mean the letting or the transaction market?

Generally, both. The letting is not easy.

Some prime rents are up, but there's still reluctance to sign for big rental agreements, I think, at least in some important cities. And also for investment markets, some buyers still prefer logistics or other asset classes much more than office.

I think that the letting market is very good. And if you look on what the square meter prices are in the major cities, they are growing and the interest is there.

So, as I said, I think there is the two pillars. The one is the small, sophisticated places.

They have highly interest and the other ones are the big places. But what we see, and you can also follow this here in Frankfurt, very good here, if you see what's happening on the letting market here and also on the building, on the development market and who drives the market, it's a very interesting story, so to say, and we cannot see that the companies reduce the square meter prices, it's the other way around.

If they change, they pay higher rents and if they stay they also pay the index rent. So I can only say what I see and that's what I see.

What's happening in the transaction market is that the prices went down, also the valuations for office went down. I think we had the peak there.

That’s my personal opinion. And I see that the interest is there, but mainly driven from foreigners and from the international investors.

We haven't seen the German investors coming back with interest. It's more a family office and a long-term investment basis in assets where it has to be done something which have a good location and you have to have a special interest.

There are some communities which want to buy and family office and institutional investors from outside and mainly driven by what can we do with this asset, do a refurbishment, do ESG investments and so on to bring it up. So these are the most interested office buildings -- most interest in office buildings.

Okay. And another question would be, you expect a little bit higher real estate management fees.

Your guidance was here €50 million to €60 million. I think the main reason might be that you have in your mind higher sales in the institutional business than this year.

This year the sales were about €100 million and now it should be perhaps coming closer to €200 million. What means higher fees also for the institutional business unit?

No, what drives the management fees is the -- or I say it the other way around. Our major goal is to drive the real estate value.

So at the moment it's not really a plan to bring it up, but it's a plan to stay with the amount. And you have to do a lot to stay with the amount, and you have to invest, and you have to do the right things in refurbishments, in all these CapEx and TIs [ph] invested in an asset, and what is the payback of this.

And we see also these interests and these wishes from our institutional investors and we have a very detailed and focused plan on the major investments and on the major assets, so to say, to drive the value, to bring it up or to stay with it and therefore we get a fees out of these CapEx, TIs and these things. It's more a -- yes, a [indiscernible] plan, investment in existing assets to drive the values than a transaction plan and these fees.

Okay, okay. I see.

I see. Yes, thank you from my side.

Thank you.

Yes, good morning, Sonja. Thanks for the presentation.

A couple of questions from my side, please. Starting with your comments on the transaction market.

I'm a bit surprised that you do not see any impact from the current 50 bps rise in interest rates. But, however, looking at your current pipeline, could you elaborate a bit on that?

You mentioned to be in final negotiation, what could be the volume here? And finally, on the transaction side, could we expect further disposals to your subsidiary for EBITDA this year, or will you only do deals excluding that?

Good morning. Yes, to come back to the interest rate, I don't think that it is -- we saw it in the past year, it's not -- the market on the banks is not driven by the smaller changes in the interest rates.

So we -- in the variables, but you have to see it on the long end, so to say, and we don't see a real impact here on the changes, and I don't expect them for the next 12 to 18 months. So if you look on what we have done in the last 12 months, we have realized interest rates in the secured market with a bank that's of 3.5% at the average.

So it belongs a little bit to the asset and to the contract, but I don't see a real influence here. On the other hand, the transaction market, yes, as I said in my last comment, we see big interest also in logistics as well as in office, but also in retail as well as letting as on transaction.

But it's all about can I get a [indiscernible], so to say. So, on the one hand, they think they can make a [indiscernible], but on the other hand, they need real asset managers who know what they are doing.

And I think the last point is the question mark some investors have at the moment. We can offer this, and therefore, I think we can show this to the investors, as well as in our own real estate assets and make it.

Therefore, we see the fees coming up in this year, but we also see it in the transaction market. And therefore, also the VIB guys are looking at their portfolio and see what can we do, what do we want to do.

On the one hand, the developments, which are new assets, do they want to stay with these assets or do they want to sell it? That's the one question.

And the other question is, as every asset manager takes the question, are the assets in the real location and what do we have to invest in the future in these assets? And I think the Management Board of the VIB looks at these continuously and decides what to do.

We also, from the Branicks side, look on our portfolio and look what we can do and invest in a portfolio which brings a certain payback period and a certain amount in cash flow back. And therefore, it's a mix in our plans what we want to sell in 2024 on Branicks commercial portfolio and VIB logistic portfolio.

Okay. So it could be the case, that you again sell any office property from Branicks side to [indiscernible].

Yes, that can be the case definitely.

And coming back to your mentioned negotiations and final negotiations, would you be able to put any figure on that?

At the moment not know. We are -- we have one transaction I think we can communicate this in the next week, but the other ones are in a stage where we cannot speak about it, so to say.

Okay, fair enough. Second question on your refinancing of €280 million promissory note.

What is your current plan on that to pay it step by step or refinancing with other type of liabilities? What is your plan here?

No, the plan is to pay it back via a mix of certain things. The one is especially to sell assets, yes, and the other one is to get some of the liquidities free that we have also on the cash side, so to say.

So it's a mix of different things, but we have a plan of this, and so the 30th of June is very near, so to say. So we are driving this and see the concrete details that we can realize it.

But as I said, it's a mix of the transaction on the one hand and getting free some safe or restricted cash here over the next week and therefore pay back the promissory notes.

But you do not strive for a further prolongation on that?

No.

Okay, perfect. And then in the report you mentioned impairment losses of €237 million and the write-down of investments of I think €130 million.

Can you elaborate on that?

Yes, so the depreciation is on the one hand the normal depreciation, so to say. On the other hand, it is coming from the sales number.

So, when we had discussed transactions and had a contract, so to say, we had the market value in place. Therefore, we have write -- have written off the value and therefore it's in the depreciation and mainly the closing of the transaction is in another quarter, so we have then sold the assets according to the written off price, so to say, which is shown in the deprecation, and therefore it's all in the depreciation number then.

And we had €32.9 million special depreciation of existing assets, which we have also on the books. And this was mainly driven on VIB.

These are all VIB assets, so to say, because as you know, when we bought the VIB company, it was on the peak of the prices and according to the purchase price allocation, we have them in our books. It's definitely the other way around on the VIB books because they do not have this purchase price allocation done and therefore we had to write-off four assets on the VIB level and this stood at €32.9 million.

And the write-downs of investments you mentioned, the €133 million. This refers to what?

Yes, €111 million is the selling of the shares of the VIB Retail Balance I. VIB has sold shares of their -- the remaining shares of their Retail Balance I, and the other one is -- one moment.

Okay, it remains to the liability.

Okay. Okay.

Thank you. That's it for the -- probably one last question on your LTV because it's probably the most prominent issue at the moment you are working on.

While you are currently at 60% and you are still noted that you're expecting below 50% by course of '25, so it seems to me a bit ambitious. You are crystal clear, convinced that you will reach it already this year?

Yes, that's a good question. So, as mentioned, we have a very detailed plan for 2025, also 2026, what we want to sell and what we want to do with our liabilities.

And therefore, as you can imagine, we have a plan what we want to sell at what price. And according to this, the KPIs develop in a set way.

I would not say crystal clear at the end of 2025. This was always also the discussion yesterday with our advisory board, I would say in the range, or in the year 2026.

But at the end of the day, it relates to what we sell and to what price. You can imagine how the loan reduces and the value reduces.

And the assets we have on our commercial portfolio, especially in the Branicks portfolio, therefore higher LTV, so to say, than in the VIB portfolio and this we sell assets from the Branicks portfolio, the LTV reduces much faster than if VIB sells something. And what we have in the plan shows the KPI as we have communicated this.

But, yes, life is going on during we are planning. So if we sell other assets for whatever reason, it may take a little longer, so to say.

But at the end of the day, it's our goal and saying this, especially for 2026, in the range of 2026, to reduce this to around 50%.

Okay, perfect. That's from my side.

Thank you very much, Sonja.

Thank you, Andre.

Yes, hello. Thank you for taking my question.

Actually, one question remaining. On the property devaluations, could you remind us or give us a figure by how much Branicks devaluated its commercial portfolio and how much percentage devaluation that was.

Good morning, Manuel. Yes, the commercial portfolio -- in the commercial portfolio, we had a devaluation of 6% and for the institutional business of 7.4% and at the average on the platform this remains to 6.9%.

Okay. And a follow-up question on that.

Do you think that has been the negative peak or might there come something else in 2025?

I think that was a negative peak. So we had 2 years around about 6% now and we have installed a department here to focus on devaluation and all these things.

To say the other way around, we [indiscernible] on what we have to do to stay stable, so to say, or to increase for some assets and we are working on this plan and therefore I think one hand on the market I think it's stable and as you have seen on the [indiscernible] residential market it goes also the other way around and I think also on the office and logistic market we have seen a peak and for Branicks itself we are working very focused on rental contracts where we can do something as well as on refurbishment and therefore I think it was a peak to say it clearly.

Okay, I see. So, really very last question.

What's the rental yield of the commercial portfolio after the devaluation, please?

5.4% versus 5.2% last year.

Okay. Thank you very much.

Thank you.

Yes, good morning. Thanks for taking the questions.

I have a couple. First of all, on the cash, I mean, could you maybe tell what the pro forma is of today and how much is restricted because you just mentioned to use some of restricted cash for the repayment of the promissory notes in '25.

Can you give some number as of today what is cash and what is restricted cash?

Definitely. End of last week, €240 million cash and there are around about €80 restricted.

Okay. And [indiscernible] the resource you would use, [indiscernible], I mean by speaking to whoever has a claim on this restricted cash, getting free some of it and use it then for the promissory notes, at least part of it, I would guess, yes?

Definitely, yes.

Okay, good. Then on the LTV discussion, also a little bit of linkage to the valuation outlook.

So I think to keep that simple, that's the 50% LTV target, which is, I think, the adjusted LTV, obviously. I mean, the main catalyst for this is then valuation gains, when I understand that's correct.

The 50% is the reported LTV to make this clear.

Reported, okay. But the main catalyst would be valuation, I think.

And then maybe gains from selling assets above the book value, when I understand your answer correctly from the former question.

Yes. [Indiscernible].

Okay. Okay, good.

And then, again, on the bond refinancing, so I mean, I think you rule out a rights issue with that market cap levels. And that would bring -- this would actually bring me to a classical amend and extend transaction.

I mean, you said there are some initiatives in place and something you're working on, but I think that's the most realistic scenario for me. I mean, other options would be, of course, maybe private debt or again using some of the VIB cash resources with it.

And of course, your cash position as of today is not too bad, I would say, too. But is there anything you can tell in what direction you want to go?

Will it either be solved from the equity side or will it rather be solved on the debt side by like an amend and extend transactions?

You have mentioned the total portfolio of what we can do, but at the end of the day, I have to be serious and so it's too soon now to talk about this. We will do it one way or the other.

But at the end of the day, we have to solve the promissory notes at the end of June now, then we do 2025, and we are working on the options for 2026 and as I said we intend to pay back all our liabilities but it's too soon to talk about the way we come there.

I have only one hurdle [ph] there, it's a little bit mean maybe, but of course with no new equity in the business I mean you would face then actually a high refinancing rate for the bond. I mean, you're coming from a quite low coupon.

When you offer or have to do an extent, you have to offer something to investors, of course, and I think you would promise another big chunk of asset sales to bait them a little bit. But what you have achieved over the last year by reducing the average interest rate across your debt maturities, I could imagine this will be offset then by a refinancing transaction in terms of the outstanding bond.

So are you pretty convinced you can do this all without new equity in the business?

As such, we have to look at it, we have to look at the interest rate we have in the market when we think about refinancing or anything like this and we definitely cannot do something we cannot afford. I think that's also clear, but it's too soon now at the moment to talk about this.

Sorry for that.

Okay. No, that's still helpful.

Thank you very much.

Thank you for taking my questions. So you mentioned that you will return to profitability in 2026.

What needs to happen for that?

Yes, as I said, we will drive our operational business, we will drive our transactions and we will drive the institutional business. So -- and at the end of the day, if this plan works, and I'm convinced that this plan works, we will reach the goals I talked about.

Is it also largely dependent on market valuations turning back upwards?

I haven't got that question. Could you please repeat it?

I hear you not very well.

Yes, sorry about that. This is my last question.

Is your plan to return to profitability largely dependent on asset valuations again rising?

No, I think as I said some minutes ago, we plan with a flat evaluation and so I don't think, as you see, we have now 6% and that definitely will go down. So at the end of the day it's not all about valuation, it's more about the operations and what we can get out of the market from the operational side.

Okay, thank you.

Thank you.

Yes, thank you very much for taking my question. Ms.

Wärntges, as you are Chairman of the Supervisory Board of VIB [ph] [indiscernible] you will be aware that our lawsuit to appoint a special auditor to evaluate potential claims is filed already with the court, and the court already set a date for VIB to reply. One of the most important points in the lawsuit is the loan provided by VIB to Branicks of back then €200 million, and now close to €300 million.

Remarkably, this loan was provided in a matter of just 2 to 3 weeks. My question on that, especially as you stated that, "all obligations will be met in 2025", what are the current state of thinking about the repayment of the VIB loan?

And the second question, will that loan from VIB will be fully and on time be repaid in cash to VIB?

So, good morning, Mr. Heldt.

It's -- I'm not the Chairman of the VIB Supervisory Board.

You're a member, I'm sorry.

Yes, and the question -- yes, we are in discussions with VIB. What we are doing here and I think we are coming to a decision in the next weeks and then we can talk about what we are doing here when we have taken the decision.

Okay. I wonder if there is a decision, the loans that I knew of have a certain date and they should be repaid?

They have a certain date and yes, at that date they are due, that's right. And what we are doing afterwards, we are discussing.

Thank you.

Yes, hello, thanks for taking my question. I've noticed that the corporate bond liability line item has reduced.

Did you buy back any bonds in the recent quarter?

Yes, we paid, we bought back part of the bond, yes.

Is it part of the ongoing strategy that you utilize the discount of the bond to basically also generate some equity gains?

Yes, this was definitely the idea because the yield was very low and so we paid back some of the bond and get the -- yes, the average yield to pay thereof.

Okay, understood. Do you expect to continue this strategy if bonds level stay that depressed?

Yes, also one option which we are thinking of, but at the end of the day the most important point is to pay back the due liabilities and remain in cash or liquidity, we think about the options we can do that and put it in our heads, so to say.

Understood. What amount of assets have you sold in Q1 so far, so until today, and what net proceeds do you expect from these transactions?

Until now we haven’t sold anything. So …

Okay.

… the major parts will happen in Q2 and then Q4.

Okay. Because there were some assets, I think, in the held-for-sale bucket.

Yes, we had some at the end of the day. We have one, or what we have in held-for-sale is the shares of a fund.

So this so-called UNITE [ph] office, it's in a fund and in held-for-sale position in the balance sheet. It's the shares we have on this fund because we want to place it out, so it's the right word, yes.

Okay. That's going to be liquidated or how can we think about it?

No, we sell it.

Okay, you sell it.

Yes, yes.

Okay. And what do you expect of proceeds from that fund?

It's around €100 million you have in your held-for-sale bucket.

Yes, but it's only the active side of the balance sheet. So if you look on the passive side, you see the loan according to this position and what we have now is, let me remember, 35.4 million.

I think it's the number of the shares we have in this fund and that's for sales, so to say.

Okay, so 35.5 million net proceeds or?

Yes.

Okay. And if I look -- I've looked through your top 20 and I saw that you did sell cashing.

I think you're number two or number three asset from last year. Can you give us an indication what amount that asset was sold for and what net proceeds do you expect from or did you receive?

Hello, this is Dirk speaking. On the top 20, I think it's still on the list, so I don't know where you get that information from.

Give me one second.

On Page 189 in the -- in our annual report?

Yes, give me one second, sorry. Let me quickly get it and then come back to it.

From the rental yield, you said 5.4% for the commercial portfolio of the whole group I guess. What is the rental yield net of VIB?

So the rental yield for Branicks portfolio.

We don't show this separately because it's for us it's one group. So …

Okay. Okay, I understood.

I understood. And now back to -- yes, I think you have like caching number one, you have like Zeppelin-Schwarzen 33, and then you have like caching number five, [indiscernible], and I think caching was in there as of fiscal year '23, I think, and it's not in there anymore as of fiscal year '24.

Okay, you mean the Interpark? So, [indiscernible] you mentioned, right?

Exactly, yes.

That has been sold last year in a portfolio deal.

Okay, but you can't comment on the exact economics?

No, we agreed with the buyer that we don't comment on those items.

Okay, but that happened in Q4, did I miss anything? Did it happen earlier?

No, it happened -- the signing was in Q2 and the closing was in Q3.

Okay. Okay, perfect.

That's great stuff. Cool.

Thank you. That was from my side.

Thanks.

Thank you.

Hi. Thanks for taking my questions.

So I've got a few on the balance sheet. There was an €85 million reduction in loans for the financing of shares.

Was that related to the retail fund you mentioned before or was that related to something else? It's in the other receivables.

Good morning. Yes, this is right.

So, when the VIB brought up the funds, so to say, they had an investor and gave them a buyer's loan at the end of the day. And when the shares were sold last year, the shares went out.

They are on the assets, they are under management at the moment, but they went out and also the liability went out of the balance sheet.

This was a repayment, not a write-off, correct in my understanding?

I couldn't understand. Could you please repeat?

This was …?

This was a repayment, this wasn't a write-off of the receivables, correct?

This was a repayment.

Yes. There was a reduction as well in DIC loan related to parity line from 18 million to 5 million.

What's the reduction there? Why did the reduction happen?

This was the devaluation of a liability. We have write-off -- we have written off a liability with 15 million.

Okay. And is there any color to that?

Why you wrote it off?

It was kind of prudent that we will roll off this liability, because we are not sure whether it comes or not, so to say.

I understand. That's the sponsor, right?

Working about the sponsor.

I cannot really understand the …

No, that's okay. And about the rest of the loan-related parties, there's 107 million left on the balance sheet.

What is your best understanding of the time frame to recover the rest of them?

At the moment, we think about it is in the balance sheet as it comes back at the end of 2026.

End of 2026. Okay, thank you for that.

I had a question on your sales, on your disposal target. Do you have any color on what you expect in the first half versus the second half, given your intention, as you said before, to repay the promissory notes at 280 million?

That implies a good chunk of the disposals happening in the first half. So I'm trying to understand how you think about that?

Yes, in the first half year around about 300 million and the rest in the second half of the year.

Okay, 50-50. Thank you for that.

One last question if you don't mind. Like coming back on the loans-related party, why do you [indiscernible] is it maturity for the two main parties for the loans-related parties in 2026 for the MainTor GmbH and MainTor Zweite?

Sorry, apologies for my pronunciation.

Yes, I’ve understood.

So what's the basis? Why do you think those will be repaid in 2026?

Yes, it's a discussion about ending of the MainTor, so to say, and there are warranties. And at the end of the day, we think that until end of 2026, they are solved and then the liabilities will be paid back.

Okay. Thanks for taking my questions.

Thank you.

Yes, thanks for taking my question after over an hour of call. Just a quick understanding.

So the admin expenses which were driven by legal and consulting costs are due to financing consulting costs. So there is nonrecurring and nothing legal.

Pardon? I couldn't understand the line at the moment.

Not so good. Sorry [indiscernible].

No, just quickly I repeat the question. Just an understanding, you -- so the admin expenses are up driven by legal and consulting costs, but that is due to financing advice, so nothing other legal?

Yes.

Okay, perfect. Thanks.

No, that's for the refinancing of the bridge and the promissory notes.

Okay, understood. Then your operating income was quite high this year.

Any particular reason for that? Is that a positive one-off?

This is mainly driven from the buyback of the green bond.

Okay, perfect. And another item was quite high, [indiscernible] charge income, a bit higher than usual.

What's the rationale behind that?

This is mainly driven on the prior year coming in 2024, then up for 2023. Quarter Okay.

Thanks a lot. And then just one last question with regards to your guidance on the real estate management fee.

So, you're guiding €50 million to €60 million this year. When we distract the global tower fee, the shares of recurring management fee was roughly €42 million.

Now slightly negative revaluation on AOM should also wait on the recurring revenue. So, just wild guess for this year's €40 million in recurring.

So, you assume a pickup of the transaction market and across of 2025. Is that right?

And if -- are there any science yet that we see that [indiscernible] pickup or recovery or what you call it?

No, as I said, we expect a recovery, but we do not show this in the numbers, so to say. What the drivers in the institutional business is the existing business, so to say.

When we do lettings, refurbishments, special things, ESG and so on, for the existing portfolio to stay with the existing value or to drive the value. So this is not driven by transactions.

Okay, but the recurring management fee as it was in 2024 is roughly €40 million and that will increase by roughly €10 million in 2025?

Yes.

Okay. Just by maintenance or other services you offer?

So what's the difference between ...

Definitely, that's around about €40 million is the normal asset and property management.

Okay.

There is a lot to do in the assets at the moment to stay with the existing values, so do big lettings, do financing, do refurbishments and so on. So the CapEx, NPI [ph], the extra CapEx NTI and letting fees is the additional fees we expect for this year and not to sell or to buy, or the fees are not mainly driven by selling and buying, but investing in the existing institutional business portfolio.

Okay, so it's purely then the recurring management fee. So you will definitely see that extra fee not separately, so that's also included in the management fee?

Yes, it's in the management fee. So we do not summarize it in recurring because it's not a year-over-year effect.

It's a one-time fee refurbished every year, as it's so to say, but it's in the range of €10 million to €15 million, yes.

Okay, perfect. Thanks for the clarification.

No real pickup is currently assumed in the real estate management fee coming from transaction performance fees, just the basic recurrent management fee and additional services you charge.

Yes.

Perfect. Thanks a lot for the clarification, very helpful.

That was all from my side.

Hi. Thank you very much for taking my question very quickly.

I was wondering, can you please clarify the €80 million of restricted cash are part of the €240 million that you mentioned at the end of last week or are on top?

Yes, that's right.

They are part of?

They are part of, that's part of, yes.

Part of the €240 million. And what's the minimum cash to run the business?

Around about €60 million.

€60 million, great. And last, is there any seasonality that we should take into consideration apart from, let's say, clearly one of inflow or outflow from disposals, but in terms of Q4 versus Q1 in terms of you receiving fees or collecting and so on.

So is there any, looking at Q1, any seasonality in terms of cash flow that we should take into consideration?

No. No.

No.

No.

Okay, very last question. When you look at the amount of disposal in the commercial portfolio, €500 million to €600 million and you said €300 million in the first half, when we think about net proceeds, is it too big an approximation to apply this 60% loan-to-value that you have across the property or you expect to sell property with lower level of debt attached to them?

Yes, 55% to 60% is I think a good run rate.

Okay, perfect. Thank you very much.

Hi, good morning. Thank you for taking my questions.

Just carrying on from the last question on disposals, other than leverage, what should we assume to be the targeted net proceeds after also allowing for any transaction costs or taxes? Will there be a significant difference from that versus the net proceeds after leverage?

Oh, that's a difficult question. It depends on what we sell and everything is different, so it's difficult to say this.

So, are you able to give us a guidance on what net proceeds would be as opposed to targeted disposal amounts?

Around about 5% of costs.

Okay, perfect. And then just on the balance sheet, so you have a little bit of bank debt.

I think by Q1 it's going to be down to €102 million plus €40 million next year. What at least for the bank debt that you have due this year, what are the plans there or that form, is that likely to form part of the disposal program or otherwise are you in discussions to extend any of that bank debt?

No, so what we have to refinance in this year on bank debts, one of it is refinance because it was due on January and the other three we are in discussions with the banks and as done in the last year, so they all went very smooth and with good conditions, so we expect them also to be refinanced in the same manner this year. So there are no bad vibrations or something like this.

We get good conditions and we are still in discussions. Also, they are due in the second half of the year, more in the fourth quarter, but we are focused on them and also talking with the banks and we refinance them.

Okay, great. And then the final question on the bond, normally in sort of the high yield market we'd like to see these bonds addressed at least 12 months before their maturity date or a clear plan.

Is this -- is that the question, is that the time frame that you're working towards, so towards the end of this year? And finally, have you had any discussions or been approached by bondholders who want to engage with you on working on some plan to refinance this bond?

Yes, as you said, I think to think about this and to take some action 1 year, [indiscernible] of a year before the due date comes is a good time frame. And yes, we are also always in discussions with bondholders.

They are talking to us and we are talking to them. But at the end of the day, as I said, it's too soon to talk about the options which we will take then.

And now we are focusing on the next step. And yes, there's a skew in September 2026.

So therefore, we have a half year to go. And yes, then we think about the options and talk about the options.

Okay, great. Thanks for taking my questions.

Thank you.

Thank you. So this concludes our Q&A session and also our call.

Thank you very much for joining us today. Our next IR highlight will be the publication of our Q1 2025 results on May 8, 2025.

So please stay healthy, and let's talk again soon. Thank you and goodbye.