Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Income from rents and leases increased by 2.8% to EUR69.8 million, indicating growth despite a challenging environment.
- Operational figures such as walls and vacancy rates remained stable, with a solid level of 6 years and 3.1% respectively.
- The company successfully sold a non-strategic office property in Hamburg at a 27% premium over its most recent market value.
- Loan to value (LTV) ratio decreased to 44.4% as of September 30, 2024, reflecting a positive development in financial stability.
- The company expects both income from rents and leases and FFO to be at the upper end of their forecast ranges for the full year 2024.
Negative Points
- FFO slightly decreased by 1% due to income and cost effects, highlighting some financial pressure.
- Income from incidental costs passed on to tenants decreased by around 6% due to increased vacancy and outstanding settlements.
- Maintenance expenses increased by around 10% year-on-year, indicating higher operational costs.
- Admin expenses rose due to digitalization efforts, particularly software license costs.
- The letting result for the first nine months showed a significant decline compared to the previous year, reflecting challenges in the rental market.
Q & A Highlights
Q: You mentioned a potential disposal volume of EUR40 million. Do you expect them to come up at around last book values or any material deviations expected from that?
A: I think overall, it will be around book value from today's perspective, but we will have to see during the further transaction process. The transaction we just signed in Hamburg was very good, but you shouldn't expect all to be at this level. So, from today's perspective, I would say around book value, but this is an average assumption.
Q: After executing the EUR40 million disposals, will you be through with your disposal program, or will you define further potential disposals before starting acquisitions next year?
A: We intend to continue our portfolio rotation as part of our regular change. We have identified a couple of assets to bring to the market next year and will look for good timing to recycle the money in combination with sales activities, while also looking at the acquisition side.
Q: What are your expectations for the year-end valuation process, maybe split by asset classes?
A: We are just starting the yearly evaluation process, so I can't go too much ahead. I wouldn't expect major changes on the valuation side, but we can't rule out smaller effects. Overall, I see a slightly higher risk on the office side than on the retail side.
Q: Could you provide more color on the conditions in the rental market for commercial assets and expectations for the next quarters?
A: We see no major changes from a few months ago. Larger, more complex letting situations tend to take longer, and tenants are considering post-corona experiences and flexible work. Sustainability topics also lead to longer negotiations, but no major changes are expected.
Q: What refinancing costs would you currently face, given your talks with banks?
A: We have started discussions with banks early and have had reliable communication. We don't foresee any major issues. It's difficult to predict financing costs, but we are in a good phase and communication is working as planned.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
