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Operator: Good morning, ladies and gentlemen, and welcome to the Branicks Group AG Q3 Results 2025. [Operator Instructions] Let me now turn the floor over to your host, Jasmin Dentz.
Jasmin Dentz: Thank you, operator. So welcome, everybody, to our Q3 results presentation for 2025. 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 Warntges, 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 uncertainties. For a discussion of risk factors, I encourage you to review the safe harbor statement contained in today's presentation. As always, all documents relating to our 9-month reporting have been made available on our website. So I now turn the call over to you, Sonja. Please, the floor is yours.
Sonja Wärntges: Thank you very much, and good morning, ladies and gentlemen. Also a warm welcome from my side to Branicks' Q3 2025 Results Conference Call. Today, as usual, I'm joined by my colleagues from the Accounting and Investor Relations departments. I will give you an overview on what has been achieved in the last quarter, and I will present you our key numbers. At the end of the call, as usual, we will also offer you the possibility to raise your questions. Dear all, in terms of a rough overview about what we have delivered and achieved during the 9 months of 2025, I would like to highlight the topics mentioned on Slide #2. First of all, again, we achieved major milestones in terms of our financial consolidation and the reduction of our liabilities. In total, we paid back promissory notes of EUR 225 million in the first half year 2025 and further EUR 68 million at the end of July. Our focus remains on further reducing our liabilities with a continued concentration on our covenants as well as on our liquidity situation. With regards to our external disposals, we look back on successful first 9 months. As per end of September 2025, we managed to sell 14 objects out of our commercial portfolio for a total of EUR 386 million. EUR 381 million of these are already closed. The remaining volume is expected to be closed by the end of this year. Branicks has strengthened its position as an active player in a still challenging transaction market, and this strong momentum will carry us successfully into 2026. Our transaction pipeline is well-filled, and our transaction teams are working successfully in order to realize our 2025 target. Our commercial portfolio continues to be a sustainable and predictable cash flow provider. Our clear strategic focus on the 2 asset classes, office and logistics, is once again reflected in the high percentage rate these 2 asset classes constitute with regard to their market value. Our portfolio continues to generate stable and predictable rents, benefiting from the rent indexation. The ongoing portfolio optimization results in a like-for-like rental growth of 1%. At the same time, we managed to increase the average rent from EUR 9.63 per square meter to EUR 10.34 per square meter. Our teams continue to successfully negotiate lease agreements, like the most recent seamless reletting in Cologne to Etain AG, as the largest single letting during 2025. With regards to our logistics asset class, the largest single letting in 2025 was a 10-year contract with organic food company, EgeSun GmbH, for 2,699 square meter in the Greater Bremen area. And also for our development project, GreenBiz Park in Beil-Ring, new letting contracts of 10,000 square meters could have been arranged. In my view, these new and follow-up lettings in 2025 prove the customer proximity and attractive high-quality properties, particularly in terms of sustainability criteria, and are demand even in a challenging market environment, and are leading to dynamic business in both asset classes. With EUR 8.4 billion assets under management, our institutional business remains the second strong pillar of our business model, recording a slight 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, again, we continue to be cost sensitive and managed to generate about 6% OpEx reduction compared to last year's period. With regards to our financial maturity profile, we continue to pursue our deleveraging path. After already having reduced our financial abilities in total by EUR 667 million in 2024, we achieved further milestones looking at the first 9 months of 2025. As promised, we paid back all of our 2025 promissory notes. This means that for the remaining of the year, we only have to roll an amount of EUR 64 million. In view of our EUR 400 million green bond, which is due on the 22nd of September 2026, I know that most of you are eager to learn more about our plans. Please be assured that, of course, we have this maturity in our heads and exploiting different options in this regard. Nevertheless, it's too soon to talk about the next concrete steps. Let me underline in this context that our focus to deleverage our balance sheet while monitoring our green bond covenants remains one of our highest priorities. We improved the bond LTV from 57.4% as of end of June 2025 to 56.1%, enlarging the headroom to the covenant level. We are aiming to reduce our LTV further and to achieve an even bigger headroom in the midterm. And we also improved the ICR covenant from 2.3 at end of June to 2.6, also widening the headroom to the 1.8 threshold. And we also continuously improved the average interest rate during the recent quarters from 2.67% as of end of December to 2.37% as of end of September 2025. Let's now have a deeper look in the results of our real estate platform shown on Slide #4. Our like-for-like rental income remained strong and rose by 0.3% for the entire portfolio under management. This means an increase of 1% for the commercial portfolio and a slight plus of 0.1% within our institutional business. Again, rent increases were realized primarily through indexations. In terms of square meters, the letting performance of the Branicks platform increased in the first 9 months by 18% year-on-year to 256,500 square meters. The total letting performance for the first 9 months of the year consists of 113,900 square meters of new leases and 142,600 square meters of renewals of existing leases. In total, assets under management was EUR 10.7 billion, were slightly down compared to last year, mostly due to disposals, which became effective in the course of the year. The commercial portfolio saw a decrease of EUR 3.2 billion down to EUR 2.3 billion, which was the direct result of the disposal activities year-on-year. The Institutional business was also affected by the termination of a larger property management mandate. As of today, only 1.7% of the total annualized rental income would expire in 2025 for Finger if lease contracts -- sorry, would expire in 2025 only if lease contracts are not prolonged. Over 89% of annualized rental income has a lease length until 2027 and longer. For larger expiries in 2025 and 2026, we already proactively started the discussions with the tenants. On our next slide, let me highlight the development of our main income streams. Net rental income decreased to EUR 96.3 million due to the disposals. Income from associated companies that mainly consisted of deferred income from fund shares decreased to EUR 3.2 million. As the market remains challenging, the real estate management fees were at a solid level of EUR 30.2 million. Apart from recurring asset and property management fees and development fees, this number also includes fees generated from transactions. The decrease is partly driven by the termination of the asset management mandate in the VIB Retail Balance fund at the end of 2024. Our income from rent and management fees on the platform, with EUR 126.5 million, is lower compared to prior year, but 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 that is overall in line with our expectations. The most important number is the reduction of the interest expenses reflected in the net interest result with an improvement of EUR 36 million, coming along with less adjustments for consulting costs and fees for the financial consolidation. In total, and to sum it up, we see the FFO amounting to EUR 33.4 million after the first 9 months of the business year, and that is exactly in line with what we expect with regards to our full year guidance range. The following slide highlights an important strategic step. We have initiated the process to conclude a control and profit transfer agreement with VIB Vermogen AG. This marks a key milestone in the ongoing integration of VIB into the Branicks Group. The goal is to establish a clearly structured, harmonized governance and decision-making framework that will enable us to capture synergies and further develop the group in an efficient and value-oriented way. Always in the best interest of our shareholders. Under the planned agreement, VIC Real Estate Investments, KGaA, will act as the controlling company with VIB as the controlled entity. The agreement also provides for annual compensation payments to VIB's minority shareholders and includes the option for them to exchange their VIB shares for newly issued Branicks shares. We expect the VIB will convene an extraordinary general meeting in February to seek shareholder approval for the agreement. This would allow us to complete the structural integration in 2026 and continue executing our joint growth strategy with even greater efficiency and alignment. In view of our expectations for the current business year, we overall stick to our guidance, except for real estate management fees. We expect gross rental income in the range from EUR 125 million to EUR 135 million, real estate management fees between EUR 45 million and EUR 55 million, and an FFO I after minorities and before taxes of EUR 40 million to EUR 55 million. With regards to acquisitions, we foresee no acquisitions for our on-balance sheet activities and EUR 100 million to EUR 200 million within our EBO segment. Our disposal guidance lays in the range of EUR 600 million to EUR 800 million, thereof EUR 500 million to EUR 600 million in our commercial portfolio and EUR 100 million to EUR 200 million in our institutional business. Beyond our guidance for the current year, our midterm 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 want to substantially improve our earnings and cash flows and return to net profit in 2026. And we have a clear midterm ambition to further reduce our debt, what will go along with improving the respective KPIs. Having said that, I would like to hand over to the moderator for your questions.
Operator: [Operator Instructions] So the first question comes from Thomas Neuhold, Kepler.
Thomas Neuhold: I have 3 questions. The first is on the accounting side. I saw that you had write-downs of EUR 178 million due to sales in the first 9 months. Can you provide more details on these write-downs, please?
Sonja Wärntges: Yes. So we had sold 2 assets for the VIB, or on the VIB level, so to say. And as you know, as we have bought the VIB shares, we were on the peak of the transaction market and the values of the assets. And when we sold the 2 assets in the third quarter, we had to take the depreciation of around about EUR 133 million of the 2 assets because it was one of the biggest asset was VIB had and the other one was a new development. And therefore, we had to take the depreciation as a so-called Sunder Alfa in Q3.
Thomas Neuhold: The second question is on your vacancy rate. I saw that was creeping up a little bit over the recent quarters. Can you elaborate a little bit on which assets are concerned? And what are your measures to reduce the vacancy rates again?
Dirk Oehme: This is Dirk speaking. It's more or less kind of a mixture. We have a certain increase in the vacancy rate in the area of our logistics portfolio, but also in our remaining office portfolio. So it's kind of a mixture, and the measures going forward, I mean, we have already signed rental contracts for certain areas, for certain square meters, but they're not yet effective. So we will see this -- in 2026, we will see the reduction in vacancy rate because of the effectiveness of those rental agreements. And yes, our teams are still working on all of our vacancies to enhance values.
Thomas Neuhold: And my last question is a more general one on the investment market outlook. I was wondering if you can provide more color on how you see the situation currently, which asset classes assets are currently in demand, it's still difficult, and what needs to change that we see a more active investment market going forward?
Sonja Wärntges: Yes. So if you look on transaction market numbers, it's real down also in 2025 compared to 2024, what was astonishing, so to say, and if you look on our numbers, we are one of the most active transactors, so to say, in this market. But anyway, if you look on the market, you see that more foreign investors are coming to Germany and want to invest, especially in logistics. And for all asset classes, I would say, in the development area, because if you look on how the investors or who the investors are, these are mostly funds, big funds, foreign funds with a lot of money. They have in the pocket, so to say, but these are the special development areas, so refurbs and so on with a certain IRR. And on the other hand, logistics, new development, redevelopment, and existing portfolio. But we also see more interest in the office area. and also interest in the retail area. But at the end of the day, yes, Core+ is, I would say, only in the logistics area.
Operator: And the next question comes from Jochen Schmitt from Metzler.
Jochen Schmitt: I have 2 questions, please. The first one is also on the vacancy rate, especially regarding the office space in your portfolio; the vacancy rate increased by around 2 percentage points over the quarter. Could you provide some more reasons for that? Did major contracts expire, for example? And second question, very briefly, any indication for the property valuation at year-end would be helpful.
Sonja Wärntges: So yes, we had -- at the end of the day, the vacancy rates in office is -- we had big contracts, 2 big contracts, yes, which ended, so to say. We have new tenants there, and therefore, we have to refurb a little bit the areas to bring the new tenant in, and it will take us around about half a year until they are in. On the other hand, we have sold one or the other asset, which was completely full. And so the vacancy has compared more percentage, so to say, in the total portfolio. So therefore, we have also an increase in the vacancy rate. The second question -- the evaluation. So we are in the middle of the evaluation, so to say. We have started them. We will have the -- we finish that at mid of December because there are a lot of assets. For the EBO segment, we have the evaluation during the year. So there are no surprises. And I think at the end of the day, we will stay around about at the same level as last year. And for our commercial portfolio, we see also the first numbers, which are in the range of last year. What's coming up is now the evaluation of our development. So we have not seen that numbers. So to sum it up, I think around about -- I cannot say it very clearly, but we will stay around about on the level of last year.
Operator: The next question is from Manuel Martin, ODDO BHF.
Manuel Martin: Two questions from my side, please. A follow-up question on the portfolio evaluation. I was wondering, I mean, if Branicks does a selling transaction and has to devaluate the property because it was in the book at peak valuation, and now the prices are different. Couldn't it be that there are more properties like this in the portfolio? That would be the first question.
Sonja Wärntges: So I think there are special assets where we're talking about. At the end of the day, it's a big difference whether you look on the normal valuation, so to say, or you go to the market and sell something. And if you look on the Cushing assets, which we have sold here, it was -- yes, I do not know any other, but it has 2 levels as a logistic asset. So it's very special. It was built for one tenant, and that's an automotive tenant. So it's not really clear what's happening there. And from our perspective, it's difficult if they want to reduce the space because to use the asset for -- on the 2 levels for 2 different tenants, yes, will be very, very hard to say. So -- and we have sold it to somebody who is very keen on automotive and to the tenant. So I think it was a good move here because at some time, the tenant -- the contract ends. And therefore, the decision was made on VIB to sell this asset. And therefore, it is a big amount what we have to take because it was a very high-level asset, so to say. At the end of the day, as I said, it's -- what we sell is specialties to get it out because we think that others could do more on this or want to invest in the asset. And as I said, if you look on the next 5 or 10 years on an evaluation basis with a discount cash flow method, it's another look on the asset than you look if you want to sell it today. And if you want not to take the CapEx and TIs, which are in the evaluation included, you have to reduce the value, so to say. And therefore, you have the business at the end of the day in these 2 values. But the evaluation itself, yes, we have taken the discounts on the last 2 years, when you remember, so in total, I do not have the total number, but it was around about 15% or so what we had in the last 2 to 3 years. So I think we have made the depreciation here. And therefore, I'm confident that we will not see big discounts this year.
Manuel Martin: Second question would be on the -- also a bit following up on the disposals. Could you elaborate a bit on -- or bring some color to the disposals? So for example, what was the net cash inflow? Because I saw that you have EUR 97 million on your balance sheet as of end of H1. So is the net cash inflow there? Or will it come? And how much will that be? And so -- and maybe you could give us some color on the 14 properties. Was it -- I think it was not all logistics, but maybe a major part. So that would be to bring a bit of color on that, please.
Dirk Oehme: This is Dirk speaking again. I mean, we -- as you can see in the profit and loss statement and in the cash flow statement, we have net proceeds of the sales as of September 30, '25 of EUR 215 million, and then less release amount that's around about, I would say, as an average, it's 50%. So it's more or less EUR 100 million, EUR 110 million was the net cash inflow for the sales we did until September 30, '25. Does that answer your question or--
Manuel Martin: On the net cash inflow, yes, yes. So -- but when there was net cash inflow of EUR 110 million, and I see EUR 97 million on the balance sheet. So there must have been some cash outflow.
Dirk Oehme: Yes. I mean we had some -- I mean, we paid back our debt and therefore -- so that's the main reason why the cash flow or the cash might be reduced.
Manuel Martin: And the final aspect on the mix, was it rather logistics? Was it office? Was it VIB? Was it commercial portfolio? Maybe color on that?
Sonja Wärntges: Yes. From the number of 40, we sold 5 office assets, and the rest was logistics.
Operator: And the next question comes from Philipp Kaiser, Warburg Research.
Philipp Kaiser: A couple from my side. I would start with the VIB topic. As far as I understood, so firstly, you consolidated all the entire business in VIB, received a payment. With that, you redeemed the intercompany loan. And now you initiated a process of controlling profit transfer agreement. So could you shed some more light on the ratio behind some -- just from an operational perspective, also from your balance sheet financing perspective, what do you expect from this agreement? And what is the potential impact on, let's say, the financial KPIs?
Sonja Wärntges: Yes. Yes, I think the rationale behind is that we do our step or our plan step by step, and the focus was on reducing the liabilities and keeping the LTV and the covenants in line with our KPIs, so to say. And the second step now is to integrate the VIB into the Branicks Group. You can imagine that this brings us to a clear structure and more governance harmonization, and so on, so that we now made the decision that we want to start the negotiations about this with the VIB. And what it brings is, yes, we want to conclude a control and profit transfer agreement with VIB and therefore, give the minority shares from Branicks. So we have to do a capital increase from Branicks side. And at the end of the day, yes, we have during this -- or after having this contract in place, we have one company and can lift that's -- what you see in the balance sheet today, the consolidation of the business. And I think that's more easier and yes, for all of us, and it brings more clearness in the governance and in the decision-making steps.
Philipp Kaiser: So I think -- so until now, you can't share more details on the ballpark of the compensation payment, the planned time schedule for capital increase, et cetera. Is that right?
Sonja Wärntges: No. So what we have started is we have started the talks with VIB. So VIB on their side have to evaluate what's happening. Also, we have to evaluate. So -- and this means really evaluation. So what's the evaluation on both sides? And this is also made by an evaluator out from the court, so to say. We have -- the court has done the decision who should be this. Now we are in preparing all the documents for this evaluator, and he needs some time. We do not exactly know how much time he needs, but we expect that we are ready beginning of next year. And so therefore, we then will publish the invitation for the annual meeting on both sides. And we expect it to be mid-February. And yes, that's what we have in line at the moment. But at the end of the day, as I said, it depends on the evaluator. We do not know the evaluator yet. We have one meeting -- we have had one meeting. And so we cannot really say, but that's the plan at the moment.
Philipp Kaiser: My next question with regards to your gross rental income and your unchanged guidance there. Could you kind of give me more insight on the last quarter? So you printed already EUR 106.8 million in gross rental income. Taking the lower end, it was only the EUR 18.2 million in the last quarter; the upper end would be below EUR 30 million. And is that purely driven by already concluded disposals as well as planned disposals?
Sonja Wärntges: No, I think we will reach the upper end here if nothing special happens. So at the end of the day, yes, we are confident to reach the upper end, maybe a little bit more, but I'm not really sure here. But at the end of the day, as I said, when nothing special happens, we will reach the upper level there.
Philipp Kaiser: And then kind of the gap between like the first 3 quarters printing roughly between EUR 34 million to EUR 36 million is due to concluded sales, which then reduced the rental income. or there any other impact on the top line?
Sonja Wärntges: No, that's exactly right. Perfect.
Philipp Kaiser: My next question is with regards to the adjusted real estate management fee. I mean the lower end is kind of just purely the recurring management fee, as far as I would see that. Do you have any -- or do you see any fee income from the transaction and performance fee side? So do we expect a pickup here in the market in the last quarter of the year?
Sonja Wärntges: Yes. As normal, the last quarter of the year is always the busiest one. So we expect this also this year. But yes, to say it clearly, you are right, it's a little bit more than the recurring fees, what we have here on the lower end. And what we see is that the discussions and the transactions take much more time than before. So you have to bring all the institutional investors on the page, so to say, you have to bring the tenants or the buyers on the same platform, and it takes a lot of time. So we are not sure whether we can -- what we can realize on the decision-making side here until the end of the year, and what will be postponed into the next year. And therefore, we have reduced the guidance here a little bit. But we are also still following all our plans, but it takes a lot more time than in the past.
Philipp Kaiser: The next one is on the OpEx side. You already elaborated that you have been able to bring down the OpEx overall by roughly 6%. After the first 6 months, they were printed a reduction of 14%. What do you expect now for the entire year? So what ballpark is possible to bring down the overall OpEx cost by the end of the year? Is it more in double-digit range or a high single-digit perspective compared to the last year?
Sonja Wärntges: No, I would say high single digit.
Philipp Kaiser: And then the last one from my side. With regards to the other adjustments, firstly, could you just quickly remind me what are the adjustments about? And following this explanation, ballpark, what do you expect for the overall adjustments on Branicks level for the entire year would be very helpful.
Dirk Oehme: So the other adjustments are mainly driven by our refinancing activities, and these are kind of adviser costs in this respect. And in the previous year, it was much higher. So this year, it's just, I would say, the rest of the refinancing activities. And then we have some adviser costs in respect of intra-group transactions. So that's basically the reason for those adjustments. And in Q4, we -- I mean, as of now, we expect something around another EUR 1 million plus/minus that will be adjusted for kind of those adviser costs.
Philipp Kaiser: Okay. So EUR 1 million overall for the last quarter, is that correct?
Sonja Wärntges: Yes.
Philipp Kaiser: And as you already mentioned kind of only the rest of the refinancing, mainly driven by the advisers too, is it fair to assume that this line will be neglectable for the other -- the coming years, at least in this size double-digit million size?
Dirk Oehme: Well, I mean, it's hard to say, to be honest. And it depends on negotiations and other kind of things. So if we -- I mean, our overall goal is not having such big amounts of all the costs in the future. But I mean, we can't guide it as of today. But yes, so it's hard to say, to be honest.
Operator: So the next question comes from Markus Schmitt, ODDO BHF.
Markus Schmitt: I have just a couple. Firstly, on the cash situation. So how much of net cash inflow will be received in Q4 or Q1 from concluded or notarized asset sales? Any figure there?
Sonja Wärntges: To be honest, I cannot say this at the moment. So we have to find it out and come back to you later, yes.
Markus Schmitt: And then on the profit and loss transfer agreement, I think on the consolidated level, this should not have much of an impact on group LTV. But since the agreement is subject to a capital increase on Branicks AG level, it will strengthen apparently, the capital base of the individual entity. Was this a requirement from your banking partners? Or was this not a key consideration here?
Sonja Wärntges: No, we are not following any advisers from the banks with this process. It was our decision and has nothing to do with any banks or something.
Markus Schmitt: And there was also a fee mentioned, subject to that new agreement. Can this be disclosed how much that would be?
Sonja Wärntges: I do not really understand what you mean, a fee.
Markus Schmitt: Yes, there was -- in the press release when this was announced, there was a fee mentioned you need to pay annually for that agreement.
Sonja Wärntges: Yes, you mean the so-called guarantee dividend. If you do such a process, you have to offer for the minorities who do not want to change their shares, a so-called guarantee dividend. And that is what we find now out with the evaluator established by the court, how the right number will be then there.
Markus Schmitt: And finally, I mean, except for the integration of VIB, the key goal is, I think, to be able to transfer the cash earnings from VIB. I mean, just to understand the key objectives. I mean, these 2 would be the key objectives from my perspective.
Sonja Wärntges: Yes. This is -- as I said, this is a lot of advantages. At the end of the day, we are consolidating the numbers. We see all these balance sheets and profit and loss. And on the other hand, we have 2 companies which exist differently. So it's much more easier if you have what is in the balance sheet also in the real life, also for the minorities as for us, so on the governance side, but yes, also on the balance sheet side. And therefore, we said we wanted to establish in the real life what you see in the balance sheet at the moment.
Operator: So as there are no further questions, I give the floor back to Jasmin Dentz.
Jasmin Dentz: Thank you. So this concludes our Q&A session and today's call. Thank you so much for joining us, and stay healthy, and let's talk again soon. Thank you. Bye-bye.