Hello, and welcome to the Deutsche Konsum Real Estate first quarter financial year 2025/2026 financial presentation. My name is Kirill Turchaninov, I'm the CFO of Deutsche Konsum Real Estate, and Mr.

Lars Wittan is also sitting right next to me. We will be presenting today's results, today's numbers.

We can start by taking a look at page 4, where we have the highlights. It is a bit more compact than we usually do.

We have last time presented our numbers just under 2 months ago, some things will be repeated because the events took place already in Q1 and we talked about those a little bit last time in December. Anyway, the Q1, we have the rental income, which decreased by €800,000 to €16.9 [million?]

, about 4.4% down versus the same quarter of the prior financial year. We are doing year-on-year comparison here, and that went pretty much as expected because of the asset sales.

FFO went up by about 57%, it seems to be somewhat, significant number. The primary driver for this is the lower interest expense.

We will expand on this and provide some more details once we talk about financials on financials slide. We have sold eight properties, and sold in this particular case means that we have signed the SPA, the sales and purchase agreement, in December for those eight properties with the purchase price of €34.7 million.

Two sales were actually closed in Q1, and they had some impact on our property metrics. We will also touch upon those later on.

Obotritia did not repay the outstanding receivable of €16 million. We have reported this and obviously shown this throughout the year, and the due date was end of December.

We are currently in discussions with Obotritia. We have consulted our legal advisers.

We are working together with Obotritia to find the best possible solution and best possible outcome. Now obviously, we did not give up on collecting the €16 million, and would like to find a really acceptable solution for us as well with Obotritia.

Loan-to-value slightly reduced to 56.4% compared to the prior quarter, which was of course September '25. What is not shown and what we do not have yet obviously reflected on the balance sheet is the results of the debt-to-equity swap.

I will say a few more words about this on the next page. However, with all things being equal, if we take a look at the so-called pro forma balance sheet as of 31/12, we are looking at LTV with obviously calculated effect of the debt-to-equity swap of about 41%.

Average weighted debt cost was substantially lower at almost 3% this time, and again, we will provide more details once we look at the page on the financing. Now we can take a look at the next page, which is page 5, where we provide a bit more details on the restructuring plan and obviously the important event of debt-to-equity swap.

Now to recap the main points of the extraordinary general meeting, which took place on the 4th of December, the mixed cash and contribution in-kind capital increase was approved. The subscription rights, well, obviously with subscription rights and the share price or issue price of €2 per share.

We already expanded on the positive effect of such a measure, obviously improved ratios, improved KPIs. We will also have a substantial number of assets released as a security.

An important step and a major part of our restructuring plan. There were a few other items approved or actually on the agenda for the extraordinary general meeting.

One of those was the change of the company name from Deutsche Konsum REIT to Deutsche Konsum Real Estate. That took effect upon registration in the company register on the 27th of January.

Now, no legal challenges were lodged to the commercial register, we made an application to the commercial register for the capital increase. That capital increase will result in a total of about 59.4 million of new shares, new bearer shares.

The effect, or the effective moment of this, will be once the company register does make that entry in the company register. 166, about 166,000 new shares were exercised against the cash contribution, and well, we, as of now, don't know who actually exercised that.

Now again, net asset value, pro forma, all things being equal, taking into consideration the capital increase, would be around €4 per share. As I mentioned before, the capital increase is not yet reflected in the balance sheet, and obviously not yet reflected in the list of the shareholders and their holdings.

Once it is, once it is reflected, once the shares are issued and are exchanged in a debt-to-equity swap transaction, preliminary, we expect VBL to hold about 60.5% of the shares of Deutsche Konsum Real Estate. Now we can take a look at the property, or actually at the portfolio details on page 8.

As I mentioned previously, two assets, two properties were closed, the total number we have as of the end of December is 149. That had effect certainly on our total fair value, which includes both properties held for investment as well as held for sale, and there was some minor CapEx, which also obviously impacted that number.

There's a development in the vacancy rate, which went down from the 14.2 to 13.6%, and the primary driver for this is a closing of a sale. One of those assets which was closed in Q1 had a substantial vacancy.

It was a former real,- supermarket and had about 11,500 vacant space, so that obviously had an impact on our total vacancy rate. Other key property metrics, which we list below here in the table, in terms of rent contribution from non-cyclical tenants, in terms of the CPI-linked linked contracts, remain unchanged versus the prior quarter.

Now we can take a look at the financing details, and we show here on page 11 the maturity profile of our liabilities. As before, due to the restructuring and the agreements we have entered into with various lenders, there are no maturities coming up in the financial year 2025/2026, and the substantial number of maturities in '27 is expected, well, is actually planned so in the restructuring opinion.

The total debt cost of 2.92% is substantially lower than the one in the prior quarter. The main impact, a primary impact for this, is that the instruments, the financial instruments, the convertible bonds as well as the corporate bonds, bear no interest as of the 1st of October until capital increase, well, debt-to-equity swap is implemented.

Therefore, they obviously heavily impact the interest percent, the average interest percent, as they are substantial in volume and they bear no interest. Once debt-to-equity swap is implemented, they will obviously no longer be counted as our financial liabilities, we expect that the average weighted debt cost will go up after, well, purely mathematically, after the capital increase is implemented.

To recap, the main event obviously was the extraordinary general meeting, the implementation of the capital increase, which is ongoing right now. As the application was made to the company register court in the city of Rostock, there were no legal objections.

We expect this to happen, within the next few weeks. Obviously, we cannot control how fast this entry is made.

We are done with our presentation part, and I would like to open the call for questions now, please, operator.

Let's give them a minute or two. Right.

If there are no questions at this time, we should probably—

Of course.

Good morning, gentlemen. Thank you for presentation.

I have questions regarding your interest rate costs. You mentioned that we will see an increase after the capital increase.

What level should we expect for the average interest rate costs in the next quarter?

Right. There are obviously a few moving parts.

As we close the sales and we sell the assets, obviously, we have to pay down the underlying real estate loans. That needs to be figured in.

The effect will come, as I mentioned, from reduction of liabilities with zero interest bearing. I don't have the exact number for you, but, Andreas, I can get back to you once we do the pro forma calculation.

Thanks.

Was? I will mute.

[unclear]

Hello, thank you. Good morning, thank you for taking my question.

I think I've seen that you have quite a bit of cash, increased your cash position. Will you be using the cash coming in from the sales and your current cash position to prepay existing loans, or how is it agreed upon?

Right, thank you—

Basically, part of the mortgage for the assets.

Sure. Right.

Now, when we sell assets which are security for the loans by lending banks, first and foremost, we have to make repayments to those banks to release the security. Part of the sales proceeds obviously goes there.

As the loans are very different, the banks are very different, and the security is rather different, it depends on a very specific case. There is no special formula.

However, the cash which is accumulated, which we are going to continue to accumulate as per our restructuring plan, is going to be used to repay the promissory notes, which we have outstanding and, due to our agreements with the lenders, maturing at the end of September '27. The restructuring opinion foresees that we will accumulate cash and repay those unsecured lenders in one shot.

Now, whether the cash will accumulate faster, as it is expected in the restructuring plan, and we might enter into discussions with the lenders to repay that earlier, remains to be seen. What is of course terribly important to keep in mind is that we treat lenders equally, there is no preference to one lender versus the other lender.

This is an underlying principle of the restructuring plan, which is, well, very fundamental. We cannot make a preference and repay one lender with this accumulated cash and not the other.

There needs to be a certain arrangement, there needs to be a certain agreement with all the lenders so that we don't endanger the restructuring opinion.

How have the banks reacted to your restructuring? Are they willing to extend some loans because of the very low LTV right now, you can basically reduce your sales program a little bit?

We've reported this, I think, in some call or in some presentation report in the past. The agreement which we reached with all the lenders during the course of summer last year was necessary for FTI-Andersch to issue the restructuring opinion.

That restructuring opinion foresees a certain plan of paying down the lenders. Now, it does not foresee that the lenders will extend loans beyond the already agreed date of 30/09/2027.

All those maturities which were in place for the next, well, now year and a half, they remain the same. We cannot deviate from the restructuring plan without agreement of all the lenders.

Are you receiving some signals from banks or others that they are happy with the development, that essentially you are also selling some not-so-great assets that they might be willing to say, "Well, an LTV of, say, 40% or 30% is fine with us. We'll just extend some existing or issue some new bank loan"?

One has to take a look at the facts. As of now, we've not received any negative feedback from the banks, which may be considered as somewhat positive.

The capital increase has not been formally implemented. The debt-to-equity swap did not formally take place.

Okay.

It doesn't make any sense to go and talk to the banks or ask for tentative opinions until this is actually formally done.

Understood.

Mm-hmm.

You are planning to speak with the banks and ask them whether they would be willing to accept a certain level of LTV at your company?

What we are planning is to make absolutely sure that all the formal steps of the debt-to-equity swap has taken place. That is the key.

What is going to happen also, as envisaged and actually agreed in the restructuring opinion, is that we'll continue to provide reports to the banks on our financials. Let's see what the banks say once we provide our next financials reflecting such an LTV.

Thank you. Understood.

Mm-hmm.

Sure, you're welcome.

Two two two follow-ups. Firstly, you have a write-down of €2.5 million in the first quarter.

What was the reason for the write-down? The second one is you're very active in selling properties.

Are your prices in the negotiation, do you have some positive news? Are the prices realistic, or should we expect here some further valuation changes in the coming quarters?

Understood. First part of your question: write-down is actually, formally in accounting terms, called bad debt accrual or bad debt provision, which we regularly make on outstanding receivables to tenants because of the aging principle, 100% 360 days, 75% 300 days, and so on.

Since the outstanding receivables were substantial at this stage, we have made such a provision. In addition, unfortunately, one of the tenants, and that's hammer-Fachmarkt in German, declared bankruptcy, and we did have an outstanding receivables, well, actually substantial one against the supermarket, and as a rule, once that happens, we make 100% bad debt accrual.

That takes care of the first part of your question. In terms of the second part, I'm sorry, can you please recap what it was?

What's your view on the prices on your

[unclear]? Got it, yes.

Got it. Thank you.

Now, obviously, it is known that we are selling assets in the market, we receive quite a substantial number of rather unrealistic offers to acquire our assets. We are working with our new property asset and transaction manager, GPEP, to actually sift through those things, but also proactively approach specific players in the market who might be interested.

Yes, there will be sales below the current market value, which is to be expected, and by the way, also reflected in the restructuring plan. What we have seen, however, in really practical terms, it is very asset-specific.

Individual assets can have, well, quite actually almost book value sale. We have seen an asset where value of the asset was, let's say, €9 million, and we sold it for slightly more than €9 million.

However, on the other hand, we also see cases where assets in the portfolio do have some discount, and that discount can be between 5%, 10%, and maybe more. We don't know that yet, that depends.

In that respect, yes, we are actively marketing certain assets with the help of external professionals. In that case, sometimes sales prices are lower than the existing book value.

As to the valuation of the portfolio, last year we actually had two. One happened for our third quarter close, which was 30/06/2025, and the second one, which happened to the 30/09, both were done as usual by CBRE, and they resulted in a total devaluation of roughly €70 million for the prior financial year, which we obviously reported as well.

I cannot possibly forecast what the valuation of the portfolio will look like at the 30/09/2026.

Okay.

Hi, Kirill. Thanks a lot for being able to ask a question, or rather two, actually.

First, have I understood your latest press releases correctly that VBL took all the shares they had to according to the agreement, not as many as they could have gotten, because it's now 60 instead of 75 million shares that are being placed all together? Secondly, the funds from operation reported for the quarter refer to the old number of shares, basically, you have to divide it by 2 per share due to the dilution for the future now?

Actually, VBL was never expected to take 75 million shares. It was the total amount of shares authorized.

However, VBL is converting its debt instruments, which are the registered bonds, in full amount. Those borrowings which we had from VBL and obviously carried them will fully be converted into equity.

This is the 59.something million which I presented was on the second page, I think. In that respect, everything went exactly as planned.

What we didn't know, obviously, at the time of the offer is how much will be exercised against cash contribution, how much of the rights will be exercised. We didn't know.

It could have been 10,000, it could have been 1 million. There was a room in terms of the number of shares authorized to accommodate potential exercise of cash rights.

166,000 or about were exercised. Obviously, that is not such a huge number, and that allowed the debt holders to fully convert.

In terms of FFO per share, I understand your question. Yes, it will be obviously reflected using the new number of shares once they are actually issued.

As I mentioned before, that didn't happen yet as the formalities need to happen, and the commercial register needs to make a specific entry, and then we will exchange debt instruments for the shares, and then we will obviously have the new shares and the new FFO numbers.

Thanks a lot. A follow-up, if I may.

Do you have some rough ballpark figure or maybe a range for the net asset value per share after the dilution and after the write-downs which are visible on the sales, not the pipeline, but the existing sales?

Not sure what you mean by the write-down. Andreas asked about that, that was a bad debt accrual.

If you're asking about the pro forma, meaning if we take the balance sheet as of 31/12 and just adjust it for the implementation of the capital increase, the net asset value per share would be, in theory, €4.

Okay. Thanks a lot.

That's very helpful.

Sure.

I would like to thank everyone for your time and attention during our call and for the insightful questions, which we hope we pretty much answered to your satisfaction. I do remember there is one follow-up.

Once again, thank you, and that concludes the call. Goodbye.