Good morning everyone and welcome to the Demire AG's H1 2026 earnings call. My name is Maxi Gutmann from NuWays and I'll be moderating today's call.

We will begin with a presentation by the management, followed by a Q&A session. You can ask your question by clicking the raise hand icon.

Once I grant you permission to speak, you will be able to ask your question live. I'll briefly explain the procedure once the presentation is finished.

With that, let's get started. Mr.

Rüffel, the floor is yours.

Ladies and gentlemen, good morning everyone. Welcome to our results presentation for the first half of '26.

Thank you for dialing in. Trust you are all well.

With me here is Tim Brückner, Demire's CFO, and Julius Stinauer, our Head of Investor Relations. Before we jump into the presentation and the details, let me start with a few general comments.

Overall, the first 6 months were marked by the consistent execution of our strategic priorities, which are, namely, actively managing our portfolio, preserving operational stability, and further strengthening our financial position. This, as we all know, against a still very challenging economic background.

Against this backdrop, we achieved important milestones during the first half of the year and continued to make solid progress in executing our strategy. Our results reflect both the ongoing transformation of the portfolio and the disciplined approach we have taken to capital allocation and asset management.

With that, let's jump straight into the key highlights and go to the executive summary. Top left-hand side, operational performance basically reflects two opposing effects.

Rental income declined compared to the previous year, amounted to €23 million, representing a decrease of around 17% year-on-year. However, this is of course a logical consequence of our asset disposal strategy to strengthen our balance sheet.

As a result of the lower rental income, you see on the right top-hand side, FFO 1 amounted to €2 million compared to €5 million in the prior-year period. Looking at the transactions, that's the middle section, we successfully completed the sale of one asset in Flensburg and a small building on our Bonn property, generating total proceeds of round about €17.5 million.

In addition, we signed further transactions in June and July with expected proceeds of approximately €40 million. Closing for these two assets, I think it was, is expected to happen in the third quarter of this year.

Then on the right-hand side, in terms of processes, beyond our operational activities, we also continued to advance important strategic initiatives. We are supporting the process initiated by our main shareholders regarding the potential sale of their shareholdings.

At the same time, we further strengthened our ESG reporting by publishing our fifth EPRA sustainability report. Then finally, if you look at the updated guidance at the bottom of the page, given the visibility we have gained over the remainder of the year, we are updating the full-year guidance.

We now expect rental income to be between €42.5 million and €44.5 million compared with the previous guidance of €41.5 to 30 €43.5 million. At the same time, we are raising our FFO 1 guidance to a range of €0.5 million to €2.5 million compared with the previous expectation of around -€1 million to +€1 million.

I think that was the executive summary and let's now talk about the portfolio performance, page 7. As you can see on the left-hand side, annualized contractual rents stood at €46 million at the end of the first half compared to €56.4 million a year earlier.

As explained before, this is mainly the result of the smaller asset base following the disposals over the last 12 months. In addition, a somewhat higher vacancy level also contributed to the decline.

On the right-hand side, if you look at the letting performance, the same dynamic is visible. During the first half of the year, we signed leases covering around 18,000 square meters compared with approximately 40,000 square meters in the prior-year period.

Again, this reduction I think has to be viewed in the context of our smaller portfolio. With fewer assets under management, potential for new lettings and lease prolongations is naturally declining.

Also, if you look at the 40,000 square meters in the previous year, this had the special effect of the conversion of the Neuss lease included. I think on a like-for-like basis the gap would definitely look smaller if you take that into consideration.

If you jump to the next one, Julius, key portfolio metrics, occupancy and lease maturity, I would say developed in line with the underlying changes in the portfolio. Left-hand side, the EPRA vacancy rate increased from 16.4% at year-end to 21.5% at the end of the first half.

This is largely caused by two effects. First, two properties became fully vacant at the beginning of the year, which was the properties in Schwerin and Neumünster.

Second, we completed the disposal of the asset in Flensburg and that asset has been, I think, almost fully let. Of course, the main priority, what I was just describing in terms of the two vacant properties Schwerin, Neumünster, is to re-let these two vacant assets, and I would say we have already some promising leads in this respect.

Then on the right-hand side, at the same time, the weighted average lease term remained at a solid level and even improved slightly from 4.7 to 5 years. Overall, I would say while the vacancy increased due to the points I just mentioned before, our lease maturity profile remains stable and appropriate for a portfolio with a significant office weighting.

On that note, Tim, if we jump to the financial highlights.

Of course. Thanks, Dirk.

I think we show in the first half of 2026 a pretty clean P&L. In the first half of 2025, if you look at it, we had significant valuation effects and impairment effects, mainly because of the at the time Limes situation that is now all gone.

We, as Dirk said, we show some declining rental income because of the before-mentioned disposals, but at the same time, we do show now, and that I think was suggested in the previous calls, a slight improvement of our operating margin as seen in the profit/loss from the rental of real estate, at least we moved up from about 67% to now 68%. There is still a long way to go, but I think the stabilization is good.

As Dirk said, there is some potentials in the leasing pipeline, and we are pretty positive that we are performing in line with our own expectations here. We had no relevant valuation effects.

We had no relevant impairment effects in the first half of this year, and also due to the extension of the Cielo structure until the end of 2027, we show pretty clean P&L with an EBIT, positive EBIT of €8 million. The financial expenses slightly increased because of the interest on the shareholder loan, and that in total then translates to the before-mentioned funds from operations of €2 million, which is slightly ahead of our planning and that also caused the slight upward lift of the guidance.

Let us have a brief look on the balance sheet. Obviously, there's also not much happening here.

There's a small balance sheet contraction due to the asset sales and the small negative result of the period. As Dirk already said, we expect some closings of two transactions in the third quarter of this year, and this will then have a bit of an effect on the balance sheet, of of course as well, as there is some mortgage loans associated with them that will then be repaid.

We are in line with the disposals in our business plan, and that will also help to cover our liquidity needs going forward for the next 5 months of this year and also 2027, and it will, of course, also help to reach our repayment targets and refinancing targets going forward. One last slide on the financials.

We saw a slight increase of the net LTV. We expect that to stabilize or be slightly reduced in the third quarter of year of the year, and we were also able to show a slight decrease on the average cost of debt, as we renegotiated a loan with one bank that we partially repaid before and were able to reach lower interest expense here.

I think in total we show a very stable first half. There is some upward potential in line of lettings, and we are quite well on track with disposals, which I think is a pretty good result in the difficult current commercial real estate market.

Thanks, Tim. I think we can open the call for questions.

I think Tim already summarized what the overall message is. I think one of the most important things is that we successfully executed the disposal strategy for this year, with the expected closings in the third quarter for two remaining deals.

That obviously helps our balance sheet. I think that's the main message.

Going forward, I would say the main focus is obviously on improving the occupancy level. The vacancy in the two assets obviously hurt us, but as I mentioned before, we have some, I would say, very promising leads, especially for one of the assets.

Let's see how that turns out until the end of the year.

Thank you very much, Mr. Rüffel and Mr.

Brückner, for the presentation. We will now open the Q&A session.

As a quick reminder, you can ask your question by clicking the raise hand icon. Once I grant you permission to speak, you will be able to ask your question live.

Let's start with the first question from Philip Sennewald. Stage now?

Perfect. First question is on the new guidance.

The €40 million proceeds you mentioned, is this all that is embedded there or is there further disposals embedded in the guidance? Also which vacancy level do you see towards year-end that brought you to this new guidance?

Tim, do you want to cover the first one?

We have one further relevant disposal in our planning for the second half of this year, but we are currently evaluating the options whether we refinance the asset or we sell it. We don't expect a major impact on this disposal anyhow, at least not until year-end.

In term of vacancy level, maybe back to you, Dirk.

I think, looking at the upcoming renewals, I would say there is nothing major in terms of bad surprises to be expected until the end of the year. We have a healthy lease pipeline, I would not expect any bad surprises in the next 6 months.

Also no improvement I'm hearing out of that?

No, as I said, that we have a healthy leasing pipeline, I would say, right? With realistic, I would say, leases there.

That I would call it at an advanced stage. There are also some bigger leases there.

Obviously, I can't talk about it before they are signed and we have to see whether the economics of those leases work, but the pipeline looks actually quite promising, right? There might be an improvement until the end of the year.

That helps a lot. Back on the signed disposals, what is the €40 million compared to the book value of that?

Is it below book or is it at book?

Pretty much in line with book.

That's good. Then maybe you moved back one asset from asset held for sale to investment properties, around €27 million.

What's the reasoning behind that and do you still market that asset, and which asset is it?

I think it's Leipzig, if I'm not mistaken. The reason why we took it out of the assets held for sales is because the interest which was shown on the market, to be honest with you, was not very appealing to us.

Then what we decided is basically we want to refill the top levels where the tenant moved out. We are now in talks with I think around three hotel operators to refill this space and I think it will be very value-accretive if we get this done before we put it on the market.

Makes sense. All right.

The one question, I saw on the cash flow statement that your income tax cash payments increased substantially compared to previous year. What's behind that?

Those were tax payments related to previous periods only.

Okay.

It's just a change of tax liabilities to tax payments. It has nothing to do with the current profitability of the group.

Obviously, there is no relevant tax payments associated to the current P&L.

Thought so. All right.

Then maybe on the FFO guidance, the implied H2 deterioration of FFO, is this simply reflecting the upcoming asset disposals or is that also You mentioned maintenance was below plan in H1. Is that deferred to H2?

Can you maybe give me a bit of granularity here?

The number is very small, giving granularity on that level is quite difficult. It's really related to the topics that you just mentioned, yeah.

It's maybe some lower spending in maintenance, and it's lower rental income as a basis.

Okay. All right, perfect, guys.

Thank you very much. I'm moving back now.

I think we had one written question that I believe Dirk mostly answered. There were some disposals signed after the end of the period, and we expect closing for in Q3.

There are no further questions, I think. I think we can wrap up this call honestly.

Mr. Rüffel, would you like to share any final remarks before we close?

Look, other than thank you very much for joining us today, right? The next call we have for the Q3 results is on the 5th of November.

We obviously look very much forward speaking with you again and in the meantime, again as always, if you have any follow-up questions, don't hesitate to reach out. We're more than happy to answer them.

Thank you very much and have all a nice day. Bye.