TAG Immobilien AG

Yes. Many thanks, and good morning, everyone.

Welcome to TAG's H1 2025 call. Many thanks for dialing in.

As always, I will start with a quick overview on Page #4 of the presentation. And after that, I will try to point out some main highlights on the following slide.

And as always, afterwards, we have, of course, enough time for Q&A. So let's start with Page #4, the highlights of the first half 2025.

FFO I saw a quite decent development. It was up 4% year-on-year.

And even quarter-on-quarter, we saw a quite significant increase. So in the second quarter of 2025, FFO I came up at EUR 46.7 million after EUR 44.9 million in the previous quarter.

And as I said, in a comparison year-on-year, there was an increase by 4%. Main driver of this positive development was the quite strong operational development, so also the EBITDA from the rental business was up even a little bit stronger at 5%, and we had quite strong rental growth again in Germany with 2.9%.

And also in Poland, here rental growth was even higher than in the previous quarters, which ended up at 3.3%. So good FFO I growth driven by even a little bit stronger growth from adjusted EBITDA.

Looking at our sales business in Poland, also here, we have a positive development. So results-wise, we saw in the second quarter of 2025, a stronger quarter compared to the previous one.

And we had a result here from EUR 11.6 million compared to EUR 5 million in the first quarter. But please remember, and I think you're definitely already aware of this, the results in the Polish sales business is realized when we hand over the apartments.

So for this year, for 2025, we expect that especially as always, more or less, in the fourth quarter of the year, we will have a higher number of apartments handed over. So therefore, you will see a strong uptick in the sales results when we hand over the apartments in the course of the year.

So all in all, we had, as I said, a positive development quarter-on-quarter, but you will see a stronger increase coming during the year. So that's the results side and looking at the sales numbers.

Also here, we had a positive development. So we sold more units in the first half 2025 compared to the previous year.

If you look at our guidance for the full year, which stands at 2,800 units, we are still somewhat behind, but we are very positive on this. We see the Polish sales market is still in good condition.

as you perhaps have realized, interest rates in Poland have come down. So we see more buyers now coming to the market.

Sales prices are still on a good level. So therefore, we are positive that we see a stronger or even stronger sales result in the second half of 2025.

Looking at the valuation result, this was definitely an important event in this quarter, and we think we can report here quite positive results. So the German portfolio saw again a value increase by 1.4% in H1 2025.

That was even a little bit stronger than in the previous valuation. So in H2 2024, we already had a positive valuation uplift by 0.9%, now even a little bit stronger at 1.4% in H1 2025.

I think a number more or less in line with peers. And that should be really an assuring sign that the trend that we had for several valuations in the past of falling values is now behind us, and we see at least a slight valuation increase in German residential, which should be a positive signal.

The Polish portfolio saw a strong valuation uplift by EUR 91 million. And this was because finally, the strongly increased sales prices in Poland are now in the valuation, and we had a lot of discussions with valuers in the past that we are selling at much higher prices compared to where our valuation stands in the rental portfolio.

Now finally, we have this approach as in Germany directly linked to potential sales prices. And this EUR 91 million increase is simply the result of the continuous growth in sales prices in the past.

So therefore, the Polish portfolio saw a quite strong valuation uplift. It stands now at a 5.2% gross yield and EUR 3,200 per square meter.

And I can also give you the values for the German valuation. So that's unchanged compared to the previous valuation, EUR 1,050 per square meter and still a 6.6% gross yield.

This positive valuation result, but also the good results from the operational business led to a quite significant increase in EPRA NTA per share. So we saw a 10% year-on-year increase even taking into account the dividend payment of EUR 0.40 per share.

So excluding this dividend payment, the NAV increase year-on-year would have even been 12%. And this positive development from the valuation from the operational cash flow plus one transaction that closed disposal in Germany, I think it was EUR 30 million or EUR 40 million in the first quarter of 2025 already led to a quite strong reduction in LTV.

So we're now at 45.3%. So that's effectively our LTV target coming from 46.9% at the beginning of the year.

All other financial metrics like ICR or net debt to EBITDA remains still strong. So 5.6x is the ICR and 10.4x is the EBITDA, and we're very happy with this positive development.

It's seen by the rating agencies, perhaps you've seen that Moody's upgraded our outlook from stable to positive for our Baa3 investment-grade rating in June. And that's, of course, for us, something very good to see.

Further details on the numbers, you'll find on the Pages 5 and 6, as always. I'm coming now to Page #8, we have seen some more details on EBITDA, FFO and FFO II.

Perhaps we don't need to go through this line by line, but again, important to say that in the key metrics like EBITDA and FFO I quarter-on-quarter as well as H1 2025 in comparison to H1 2024, we had a positive development. That is, of course, good to see for us.

If you look at the FFO I for the first half, we are already at EUR 91.6 million, comparing that to our guidance, which stands still between EUR 172 million and EUR 176 million. I think here, we are on a very good way.

So therefore, we should be very well positioned for the second half of the year to achieve at least the guidance for FFO I. Page #9 gives you further details about the EPRA NTA calculation.

Clearly, EPRA NTA per share was reduced by the dividend payment of EUR 0.40, but the portfolio valuation led also to an uplift of EUR 0.69. You see this on the small chart on the right side.

But what is always, from my side, most important, if you look at what we call net profit and other effects, you can also say basically the operational business really also led to a quite strong growth of EUR 0.74 per share only in the first half of the year. And this is something we try to point out again and again regarding EPRA NTA growth and also the reduction of LTV.

We've got a very natural path driven by the very strong cash flow that we have from our operational business from the rental business plus the sales business in Poland. We're here in both metrics on a simply very natural growth/reduction path.

Page 10 gives you an overview about our financing structure. I already mentioned the outlook change by Moody's.

And we can tell you that we, of course, are also in discussion with S&P and also here in a good way and in fruitful discussions. So the outlook is still stable.

But I think when we continue like we did in the past 1 or 2 years, also here, we will see a positive trend. The average interest rate for the total financial debt stands now at 2.5%.

And yes, if we refinance something today, it's more expensive, but it's not a completely different world. So we know that our bond is trading for roughly 5 years at perhaps 3.6%, 3.7%.

New bank financing in Germany is perhaps 3.2%, 3.3%. So yes, with every refinancing, we have a slight uptick, but it doesn't change the picture completely.

So that's, of course, also for us a good basis for further growth. Maturity profile is shown on Page #11.

Basically, there's just one larger upcoming maturity that's next year, the convertible bond, exactly 1 year, which we repay, which is EUR 470 million. The cash position at the moment is very strong, EUR 870 million in the balance sheet, plus EUR 215 million of unused credit facilities.

So any refinancing should not be really an issue. Page #13 shows some more details on the German portfolio regarding rental growth and the CapEx.

CapEx and maintenance, you see this on the top right of the presentation or of this slide is really exactly in line with the previous 3 years. Rental growth, 10 bps lower than in the previous quarter.

Don't read too much into that. So that's not a new trend that we are now expecting a reduction in rent.

So we still see very good fundamentals. I mean our guidance is perhaps somewhat conservative for the total like-for-like rental growth that was between 2.5% and 3% that stands already at 2.9%.

But yes, again, be reassured that we really here see strong fundamentals in our German portfolio rental growth, but that should be nothing surprising. Page 14 shows the vacancy reduction.

If you look at the development in the first 2 quarters of 2025, we are now at 3.9% vacancy rate at the end of the first half. That's very similar to what we have seen 2024, 2023.

So a small uptick in the first quarter, then stable in the second quarter, same development in 2025. So from here on, as we're now finishing more modernization projects for vacancy reduction, we expect vacancy rate reduction.

And reduction means reduction in comparison to where we started in the year. So not only a reduction from the currently 3.9%, our target, and I think also our guidance was that we reduced the vacancy from 3.6% at the beginning of the year by roughly, I think, at least 20 basis points.

So we should end up more towards the 3.4% at the end of the year. On Page 15, there are some more details on the portfolio valuation in Germany.

Again, good to see that we have the second value increase in the German portfolio in a row. And of course, we have no valuation results for the second half of the year yet.

But if we talk to valuers, if we look into the market, we see this trend of a slight valuation increase, so something between 1%, that's a little bit more also as a kind of base case for the second year. And you have also heard this from market participants or from valuers that everyone expects something around 2% or 3% value growth for a German portfolio for the full year 2025 and the half year valuation basically confirms this.

Let's come to the Polish portfolio, and I'm now on Page #17. We have now 3,349 units completed.

The vacancy rate in the apartments that are on the market for at least 1 year is still very low. So it was 2.1%.

I think in the previous quarter, we had 1.9%. So effectively, since we are on the Polish rental market, every apartment that is on the market or every building that is in the market for more than 1 year is a full occupancy.

So we're talking about vacancy rates for these stabilized units of around 2%, and that's more than the natural fluctuation. And that's, of course, for us a great confirmation for the big demand that is for our product in the Polish market.

Total like-for-like rental growth was 3.3% in the portfolio. So good to see that it increases.

And the in-place yield, the valuation uplift that I mentioned, stands now at 5.2%. On a per square meter level, it's some [ PLN 13,000 ], so that's 3,200 units.

That's a price we're really comfortable with that we could sell that at these price levels in the market. Pages #18 and 19 show some more details on the sales results.

That's on Page #18. And on the revenue recognition, meaning the handover of apartments, that's in Page #19.

I already mentioned that we should expect basically as similar in 2022 and 2023 that we will have higher sales results towards the end of the year. And again, for the sales numbers, we are quite optimistic that we have a stronger H2 compared to the first half of 2025.

And finally, a quick look on the guidance, which is on Page #21. We are confirming all guidance for the full year 2025.

So the guidance remains unchanged. But again, we feel very comfortable when we look at the first half of 2025.

Look where we stand today, also including the Polish sales business that we are on a good way to achieve this guidance that we present here. Yes, that's it from me as a quick overview.

Thank you so far. But I'm, of course, now happy to answer your questions.

So I've got 2 questions from my side. One on the FFO guidance and then one on the pace of sales in Poland.

If we start with the FFO guidance, you're running comfortably ahead of the reiterated full year guidance on an annualized basis. I think you mentioned in the presentation, you should achieve at least guidance.

What held you back from increasing the guidance range this morning? And then on the pace of sales in Poland, you're anticipating a higher volume of sales to come over the second half.

What is giving you the confidence you will achieve the targeted volumes? Is this trend you've seen so far over the third quarter or discussions you're having with potential buyers or both?

Marios, so regarding your first question around the FFO I guidance, where the uncertainty that we still have, I think it's typically 2 items. First item is maintenance, which has a kind of seasonality.

And here, we -- as in the previous year, we were lower in H1 compared to what we expect in H2. And we don't want to limit ourselves that we postpone some larger projects, which potentially qualify as maintenance that we need to put it into the next year because otherwise, the guidance would be risk.

So that's always a slight seasonality. Second is taxes, where you have a certain volatility.

On the operational side, I'm very comfortable that we're here on a good way. So therefore, kind of conservative approach also regarding these 2 metrics to be here really on the sales side.

And regarding the sales numbers in Poland, yes, clearly, we see that the market is on back of the reduced interest rates more and more positive, but we also have now really new projects to sell. So the building permits that we received over the last month now allow us to open new stages in the coming weeks and quarters or next 2 quarters.

So it's always a mix when you sell apartments on one side, clearly, you need market demand. And secondly, also the offer that you have on the market.

That's also clearly important. So therefore, we're optimistic on the sales numbers for the second half of this year.

Very clear. Just as a slight follow-up.

I think you're saying you're seeing more buyers in the market. Are you seeing also more inbound buyers for your own portfolio?

You mean for the German portfolio or is it for the Polish portfolio?

No. For the Polish portfolio, I think generally, market feels like you're saying it's -- you're seeing more buyers out there.

Are you seeing more inbound into your own projects you're trying to sell?

Yes. I see -- I mean, look at the development in Poland, there's a lot of cash sitting in Polish bank accounts, which is quite unusual for Poland because interest rates were high.

Now they're going down. So we are convinced that this cash will be now more or less released step by step and will be reinvested.

And if you ask people in Poland, what is the kind of asset you want to invest in? I mean the stock market like in Germany is not super popular here.

So people love to invest in real estate. So reduced interest rates means on the one side, we have more mortgage buyers.

And on the other side, we have also you know that we have a higher share of cash buyers who perhaps then are giving up the alternative of leaving the money in the bank accounts and reinvesting this into real estate. So we see this trend coming.

Just to confirm on the valuation gains that you're seeing in Poland, that is on the rental portfolio, right? And how does this impact your expected development gains also taking cost inflation into consideration?

Yes, I can confirm this. This is on the rental portfolio.

And yes, this is, of course, for us then even an additional upside for our whole business. So you know that we are constructing the apartments for, let's say, on average a 7.5% gross yield.

And so that's a very nice cash-on-cash yield. But after that, we will realize perhaps not on day 1, but once the assets are stabilized, they fully rented out.

So over the next year or, let's say, 2 years, valuation gain, which should be at least depending on the location, perhaps looking at today's figures, 200 basis points. So this is for us an additional driver for future NAV growth that we know the valuation that our portfolio has is perhaps 200 basis points lower to compare to what we -- the level where we constructed.

Okay. That's clear.

And how does it affect your capital allocation decisions? Are you looking to accelerate based on this development gains that you are getting?

It's a confirmation. So as you know, we already had the plan to significantly increase and have the plan to significantly increase the Polish rental portfolio.

And that's a good confirmation. Poland remains for us a clear preference regarding capital allocation.

And we still like the Polish state business a lot, but the segment that we want to grow and that we also support from TAG level is the Polish rental business.

Okay. That's clear.

And then maybe turning to Germany. I appreciate your decision to grow in Poland to make it a more material size.

But at the same time, you're also achieving quite attractive returns on modernization. How should we think about spend on CapEx there?

Yes. I mean we're still investing in Germany and the CapEx that we're investing is not reduced.

So it's not the case that we the, how should I say it, forget the German portfolio and it's only about Poland. No, that's not the case.

In the combination with a good like-for-like rental growth plus a good vacancy reduction, with targeted modernization spending that we're doing, that's still a good business. And so we will generate, I think, attractive internal growth in Germany still.

In Germany, it's not so much about external growth. So we can tell you, I mean, we also looked at the market in Germany regarding acquisitions.

Is there something opportunistic out there? And we saw some smaller portfolios that could be interesting.

We realized, okay, it's quite competitive regarding the prices again. So perhaps a good sign for confirmation.

So when we think about external growth, meaning in Poland, building up the rental portfolio, that's Poland. And in Germany, we will, of course, continue to work on our existing portfolio, perhaps some smaller acquisitions in the future, but that's the view we have on Germany.

Most of my questions have been answered already, but maybe one on BTR transactions. Do you have any BTR transaction to corroborate the Polish valuation gross yield of 5.2%?

Andrew, this gross yield is confirmed by our ongoing sales. So -- and it's, in most cases, really easy.

So you should have in mind that if we own, for example, a rental project, the stage right across the street is also built by us and is perhaps a sales project. So on the one side of the street, we are renting out the apartments, which we sell on the other side of the street.

So I'm simplifying a little bit, but this is often the case. So we can exactly see, okay, these apartments also then, for example, for EUR 3,200 per square meter, and that's basically the confirmation.

If you look at Poland as an investment market, and there are -- so far, there have been not really big transactions in the build-to-rent segment. I mean more and more investors are looking in that.

You'll see also some transactions. It's mostly forward deals between developers and investors that are doing this.

Yes, this will also develop in the future. So the Polish investment market regarding the build-to-rent project is still in an early stage, but that's basically the advantage that we have that we are one of the first to really grow in this market.

Okay. That's clear.

And then on organic growth, your like-for-like growth accelerated in the quarter, albeit very marginally. Could you maybe just give some color around what is happening with Mietspiegel Prinz and then what we can expect for the next year also?

Yes, we have not given guidance already for 2026. But if you look at the trend that we had in the past 2 or 3 years, you always see that what we call basis like-for-like rental growth, and that's if we quickly look at page, I think, just give me a second.

As shown on Page #13 of the presentation, so you see in a light blue color, the development of what we call basis like-for-like rental growth, which is purely from the Mietspiegel and from tenant turnover. So this was 1.5% 2022, 1.8% 2023, 2.5% 2024.

I'm sure we will see also good development in the full year of 2025, but this rent is simply growing. And we're not dependent on some few Mietspiegel.

As you know, we have a portfolio with quite a substantial number of locations. So -- but it's not that one Mietspiegel comes out and it's very important for us, but the trend is clear and that trend is simply positive.

Actually, 2 questions. The first one is on property values.

I mean you showed the 1.4% like-for-like value growth for Germany. Just to clarify, is it including or excluding CapEx?

I know it's not that relevant for you compared to peers, but just to get the comparable base. And also maybe on Poland like-for-like value growth, maybe you can give us a number.

And do I understand it correctly, this was a step-up change, and we should not assume this momentum to continue?

Firstly, your question regarding the value growth number for Germany. As far as we know, it's exactly comparable with peers reporting.

So this is really the like-for-like value growth without any CapEx impact. So the 1.4% that we published today is from everything we know, exactly comparable with the -- I think it was 1.2%, 1.3% at Vonovia and LEG.

So we can basically say everyone has more or less the same valuation results. So that should be directly comparable.

And if you include the CapEx result, the 1.4% is a little bit lower, but as you said, it's not that meaningful for our company. So that's comparable.

And don't take this valuation uplift for Poland as a new run rate. So in absolute terms, EUR 90 million is for the total group, not significant.

But on the Polish portfolio, there was more something around 20% uplift as we have now really achieved that the sales prices we realized in the market are basis for the valuation that it should be. So from here on, you should not expect this to be the new run rate.

But I think we had a year-on-year increase in sales prices of 7%, so that's still strong. So let's assume that it's at least -- sorry, Polish inflation rate, which is currently 4%, something like that.

If this is an indicator for future valuations, that sounds reasonable. But just to give you a feeling where we expect the values can go to.

So we still see a positive trend in Poland.

Okay. Second question is on the Polish rental portfolio.

It roughly remained unchanged Q-on-Q. Just to understand the dynamics there and what we should expect in the second half?

You mean the number of units was stable, right?

Yes.

As you know, a building that we built for rent, the construction time is 2 years. So everything that is finished today has been started 2023.

And when you remember the time in 2023, that was a time where we basically did not start new rental projects in Poland. We simply postponed this because at that time, refinancing was a priority, cash was a priority, deleveraging was a priority.

So if we start a project 2024, it's finished next year. If we start a project this year, we have currently, I think, 1,500 units under construction, more will follow in the second half of the year.

It will be finished 2027. So that's why we're always predicting a strong growth in numbers of units in the Polish portfolio more in 2027 and 2028.

Because actually, we have started or are about to start the construction of new rental portfolios as we are now simply in a much better position to grow.

Two questions from my side, please. First question is regarding the situation in Germany when it comes to acquisitions.

It seems that it's a bit difficult to conduct acquisitions. Transaction volumes seem to be low.

What's your impression? Is there a way that this might improve?

Or what's your feeling on the market and also looking forward on that, please?

I mean for us the important thing when we look at the German transaction market is that we're not dependent on this development. So a, we don't need to sell because we are already at our LTV target.

So this disposal program has been completed more or less already in 2024. So we're not under pressure to sell.

So we don't need from a deleveraging point of view, large transaction volumes. Of course, it will be good to have this opportunity, but if it's not there, we can handle this.

And secondly, on the acquisition side, I mean, we look at that really opportunistically. If we see opportunities, yes, happy to look at it.

I mean we know the German market extremely well. And if we find something, happy to buy, but also here without any pressure because on top of the natural growth that we have from the German business coming from internal sources, we have this growth path in Poland.

So therefore, we are more in a position to observe. As I mentioned, we looked at and we are looking at German acquisitions, small and smaller sizes.

When we were in processes, I mean, our offer was not obviously not taken. So that speaks for perhaps about the little bit smaller portfolios we are competing with a more competitive market, which is good, which should be also a confirmation for valuations.

Yes, it's true we don't see the large transactions yet. But as I said, for us, we are observing this, but good that we're not dependent on this development.

Okay. I see.

My second and last question is a bit of accounting question. There was other financial result in the P&L of minus EUR 39 million.

Is this due to the convertible bond valuation what we see there?

Yes. I think more or less the complete amount.

So the equity component of the convertible bond is always valued at a fair value. So therefore, you can also have the next quarters ups and downs in this result, which is a noncash result.

It's excluded from NTA, it's also excluded from FFO.

Yes. I have 2 questions.

The first one is on the Polish build-to-sell portfolio. It seems that the number of units under development in the land bank declined quarter-on-quarter from roughly 25,100 in Q1 to 23,700 in Q2.

So obviously, you sold some units, but I was wondering if you were selling also any land bonds in Q2 or what else could have caused this decline?

This is -- so the split that we do between build-to-hold and build-to-sell sometimes changes by, give or take, 200 or 300 units because we perhaps dedicate one project that was originally for sale, more for rent. And that could be one reason.

And also, we are often buying indeed larger land plots where we then in the following quarters, perhaps resell a smaller part of that. And that has been a quite nice business in the last years because if we buy a larger plot of land, the competition is clearly not that strong because not many developers in Poland can buy something like we did in a transaction that was also published in Warsaw for more than EUR 50 million.

And then we resell perhaps 10%, 20% of this land plot afterwards. So therefore, yes, also the total land bank can change because we sell some plots.

That's correct.

Okay. And my second question is a general one on financing costs.

So obviously, residential prices in Germany going up again and the rental market is in a very healthy shape. So I was wondering if there has been any change in the behavior of banks to finance residential assets recently or if there has been any positive impact on spreads?

Or is the situation still more or less unchanged compared to previous quarters?

I would say that's unchanged, and it was even good during, as you know, the more difficult times 2022, 2023. So regarding the bank financing, we had always full access for financing, and we did not observe any strong increase in the margins.

Yes, margins are today perhaps a little bit higher compared to 2021. That's true, but it's not significant.

And therefore, it's good to keep this financing source. Yes, it's a little bit more complicated regarding the process.

It takes in the meanwhile, 3 to 6 months, perhaps even longer to get a bank loan, but it's still a very reliable financing source that is more or less always open, and therefore, we want to keep it even if the difference to the bond spread is not that big anymore.

First one would be in regard to valuation. Just previously, you included a slide splitting out the yield compression operational value growth drivers in your presentation, that was very helpful.

Maybe you can include this again. And then in regard to my question, Germany, did you value the whole portfolio and the same applies to Poland?

And also in Poland, who is your valuer? Is that JLL?

Simon, so both portfolios are fully valued. So we do this always completely in H1 as well as in H2.

And the valuation in H1 was done by CBRE in Germany, and it was done by Savills in Poland.

Okay. Great.

And then driven also what you mentioned by your operations and also by the revaluation, you get a lot closer to your target level of LTV. Is there -- and there was a similar question previously asked, but is there a general change in your capital allocation going forward then when -- because reaching that target?

Yes. For us, it's not surprising that we're reaching the target because we know, as I mentioned in the presentation, we have a very natural way to delever because we simply produce a lot of cash.

So everyone is aware of the FFO that we create, but always emphasizing, we also have a very strong cash inflow from the Polish sales business, which is really net cash EUR 50 million to EUR 60 million a year. So therefore, this deleveraging process is natural for us, not surprising that we have the LTV target, and this will also continue this cash generation over the last year -- over the next years.

And this is a good basis for growth to grow. So -- and that's for us good.

So we have really the opportunity now, especially on the Polish rental business to grow without hurting our LTV.

Okay. And would you review your dividend policy for this year paid out in early 2026?

Or is that set for the foreseeable future?

No, it's not set. So what's the purpose of our dividend payout, which is quite -- let's call it a moderate one.

We have 40% of FFO I. As you know, we offered also our shareholders the option of a scrip dividend, but that has a reason because that supports the growth.

And again, we have this growth opportunity, especially in the Polish rental market. So as long as we -- let's say or I say differently, once we have a more meaningful portfolio in Poland on the rental market, then clearly, we have much more freedom regarding our investments.

So therefore, we simply have to make cash available also for distribution to our shareholders. And therefore, a higher dividend is absolutely in the cards, but too early to say today when is exactly the case, but the trend should be very clear.

There's a clear potential for a higher dividend.

Okay. Great.

And one in regard to your revolver, could you indicate you here some modalities of the contract such as term interest rates and also the banks involved?

You mean the RCF?

Yes.

This is not one RCF. These are -- it's quite fragmented.

I think it's 5 banks, and it's not syndicated RCF, so very simple contracts always with one bank on an average size of EUR 30 million, something like that, that's a little bit more. So that's not a very complicated structure.

Okay. Great.

And just one last one in regard to your vacancy reduction. Are there particular projects that will be finalized during H2 2025 in Germany?

Yes, not one big project to mention, but we are finishing, for example, in [ Poznan ], we have finished a larger project. Also in Magdeburg, we are finishing a project.

So nothing unusual, but that's also, as I said, quite normal development for the year. So the second half is always the strongest.

And you should expect a similar development like in the past 2 years to come in the second half of this year.

Two questions left. First is on your guidance.

You mentioned to be confident at least on the FFO I guidance. Does it mean that you are less confident on the FFO II guidance?

And how secured is the revenue recognition from Poland sales for the remainder of the year? Will we see already a strong pickup in the third quarter?

Or is it only completely back-end loaded for the fourth quarter? This is the first question, please.

Yes, Andre. And we are also confident for the FFO guidance or for the Polish sales business.

And the revenue recognition is dependent on the handover and most handovers will take place, as it is not unusual in the fourth quarter. I think more or less all of the apartments or nearly all of the apartments that we need to hand over this year are already sold.

So it's just -- if you ask me what is the risk, the risk is that we do not finish the project on the 31st of December, but on the 1st of January, but something where this is something where the team is very experienced to handle this. So it's more something technical.

I think we expect that more than 1,500 apartments or even a little bit more will be handed over in the fourth quarter. So I'm very confident that we achieve also the guidance for the Polish sales business in 2025.

Okay. Perfect.

Last question is you mentioned lower interest rates in Poland. Does it also change your view on the financing strategy for developments in Poland in any way?

Yes. Regarding the sales business, we have always financed it locally, so in Polish, zloty.

As you know, the debt on this business is quite low because customer prepayments are mainly financing the construction work. Yes, it could also be an option in the future to look into zloty financing for the rental business if this development continues.

So let's see. For now, we still prefer to finance that in euro compared to Polish zloty.

What is the different at the moment? In terms of...

Yes, yes. Firstly, it starts with the margin.

So if we do this in euro, I mean, you can look at our bonds for 5 years, they're trading perhaps at, let's say, some 140 basis points. So a bank loan on a Polish rental portfolio is perhaps slightly below 200 basis points.

So that's a 50 basis points difference. And then of course, clearly the difference in the base rate.

So swap rates for 5 years are perhaps currently something around 240 basis points or a little bit lower in zloty, that's even higher. So you need to put 200, 250 basis points on top of this.

But as I said, let's see how this develops. I don't see it 2025 as a scenario, perhaps also not 2026, but it will be good to have this flexibility in the future.

Yes. Many thanks all for dialing in into this call.

As always, if there are any questions left, please feel free to contact me or our IR team. So thanks for joining the call.

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