Branicks Group Stock

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.

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.

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 Instructions] So the first question comes from Thomas Neuhold, Kepler.

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?

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.

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?

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.

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?

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.

And the next question comes from Jochen Schmitt from Metzler.

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.

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.

The next question is from Manuel Martin, ODDO BHF.

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.

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.

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.

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--

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.

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.

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?

Yes. From the number of 40, we sold 5 office assets, and the rest was logistics.

And the next question comes from Philipp Kaiser, Warburg Research.

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?

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.

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?

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.

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?

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.

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?

No, that's exactly right. Perfect.

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?

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.

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?

No, I would say high single digit.

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.

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.

Okay. So EUR 1 million overall for the last quarter, is that correct?

Yes.

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?

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.

So the next question comes from Markus Schmitt, ODDO BHF.

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?

To be honest, I cannot say this at the moment. So we have to find it out and come back to you later, yes.

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?

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.

And there was also a fee mentioned, subject to that new agreement. Can this be disclosed how much that would be?

I do not really understand what you mean, a fee.

Yes, there was -- in the press release when this was announced, there was a fee mentioned you need to pay annually for that agreement.

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.

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.

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.

So as there are no further questions, I give the floor back to 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.

This conference will be recorded. Good morning, ladies and gentlemen, and welcome to the Branicks Group AG Half Year Results 2025. [Operator Instructions]

Let me now turn the floor over to your host, Jasmin Dentz.

Thank you very much. So welcome, everybody, to our half year 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, Sonja Warntges, will now give you an overview of our financials, our guidance and the current market developments. 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 fast and the safe harbor statement contained in today's press release and presentation. All documents related to our half year 2025 reporting have been made available on our website.

I will now turn the call over to Sonja for her remarks. Sonja, please, the floor is yours.

Thank you, Jasmin. Good morning, ladies and gentlemen. Also a warm welcome from my side to Branicks' Q2 2025 Results Conference Call. Today, as usual, I'm joined by my colleagues from the Accounting and Investor Relations department. I will give you an overview on what has been achieved in the last quarter and present to you our key numbers as well as our unchanged outlook for 2025.

At the end of the call, we will also offer you the possibility to raise your questions. Here all, in terms of a rough overview about what we have delivered during the first half year 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 additional EUR 68 million at the end of July. Our focus remains on further reducing liabilities with a continued concentration on our covenants as well as on our liquidity situation.

With regards to our external disposals, we made good progress during the second quarter. During the first half year, we managed to sell 10 assets out of our commercial portfolio for a total of EUR 131 million. Out of these transactions, a total of EUR 82 million is already closed. The remaining volume is expected to be closed during the second half of this year. We are confident that Branicks again will be an active participant in a still challenging transaction market in 2025, and we stick to our EUR 600 million to EUR 800 million disposal target.

The transaction pipeline is well filled and our transaction teams are working successfully in order to realize the deal. With regards to our commercial portfolio, it continues to be a sustainable and predictable cash flow provider. 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 9.06 per square meter to EUR 10.02 per square meter.

With regards to our logistics asset class, the largest single letting in 2025 was a 10-year contract with the organic food company, EgeSun GmbH for 26,699 square meters in the Greater Bremen area. Other major lettings in the logistics sector included a successful new letting contract for our development project [indiscernible].

In my view, these new and follow-up lettings in 2025 prove that customer proximity and attractive high-quality properties, particularly in terms of sustainability criteria are in demand even in a challenging market environment and are leading the dynamic business. 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 a 14.3% OpEx reduction compared to last year's first half year. With regards to our financial maturities profile, we continue to pursue our deleveraging path. After already having reduced our financial liabilities in total by EUR 667 million in 2024, we achieved further milestones during the first half year 2025.

As promised, we paid back all of our EUR 225 million promissory notes. This means that for the remaining year, we only have to roll further an amount of EUR 77 million, and that includes about EUR 5 million scheduled amortization. The remainder consists of 3 real estate financings where we are already in advanced negotiations. In view of our EUR 400 million green bond, which is due on the 22nd of September 2026, we are exploiting different options in this regard. Nevertheless, it is too soon to talk about 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 our bond LTV from 58.2% as of end of March 2025 to 57.4%, enlarging the headroom to the covenant level. It is expected to improve further due to disposals and the already achieved redemption of the 2025 promissory notes. We are aiming to reduce our LTV further in the midterm. And we also improved the ICR covenant from 2.1x as of end of March to 2.3x, also widening the headroom to the 1.8x treasury.

In terms of our average interest rate, it is important to underline that over the course of the quarter and due to the redemption of the bridge as well as due to additional optimization, we continuously improved this KPI during the recent quarter from 3.36% as of end of March 2024 to 2.4% as of end of June 2025.

Let's now take a deeper look in the results of our real estate platform shown on Slide #4. Our like-for-like rental income remained strong. The like-for-like rental income rose by 0.9% for the entire portfolio under management. While the commercial portfolio showed an increase of 1%, we also saw a slight plus of 0.9% within the institutional business. The rent increases were realized primarily through indexation.

In terms of square meters, the letting performance of our platform increased in the first half year by 18.7% year-on-year to 214,700 square meters. The total letting performance for the first half year shows 104,000 square meter new leases and 110,700 square meter renewals of existing leases. In total, assets under management was EUR 11.1 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 from EUR 3.6 billion down to EUR 2.7 billion, which was a direct result of the disposal activities year-on-year. Institutional business was also affected by the termination of a larger property management mandate. As of today, only 2.1% of the total annualized rental income would expire in 2025 if these contracts are not prolonged. Over 85% of annualized rental income has a lease length until 2027 and longer. For larger expiries in 2025 and 2026, we already proactively started negotiations with the tenants.

On our next slide, let me highlight the development of our main income streams. Net rental income fell to EUR 63.4 million, primarily because we successfully sold rental-generating assets. Income from associated companies that mainly consisted of deferred income from fund shares decreased to EUR 2.1 million. The real estate management fees remained stable at EUR 20.8 million. Thereof EUR 19.8 million recurring asset and property management fees and EUR 1.9 million transaction-related fees. Our income from rent and managed fees on the platform with EUR 84.2 million were slightly lower year-on-year. Nevertheless, still showing a very high degree of recurring income stream.

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 net rental income shows a decrease of EUR 13.7 million due to disposals. The share of the profit from associates decreased by EUR 1.3 million due to the sale of the VIB Retail Balance I at the end of 2024. Our OpEx development had a positive contribution to our FFO, showing results from our Performance 2024 program. The increase of our adjusted net interest result amounted to EUR 19 million. This is an immediate positive effect from the continued reduction of our liabilities. In total, and to sum it up, we see the FFO amounting to EUR 20.7 million after the first 6 months of the business year that is exactly in line with what we expect with regards to our full year guidance range.

In view of our expectations for the current business year, we stick to our guidance. We expect gross rental income in the range from EUR 125 million to EUR 135 million and real estate management fees between EUR 50 million and EUR 60 million. The FFO I after minorities and before taxes of EUR 40 million to EUR 55 million. And in regards to acquisitions, we foresee no acquisitions for our on-balance sheet activities and EUR 100 million to EUR 200 million within our Institutional Business segment.

The disposal guidance lays a range of EUR 600 million to EUR 800 million, whereas 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 strengthen cash flow and financial position. And we have a clear midterm ambition to further reduce our debt, what will be along with improving the respective KPIs. And having said that, I would like to hand over to the moderator for your questions.

[Operator Instructions]

The first question comes from Stefan Scharff, SRC Research.

My first question is about the EPRA vacancy rate. It's a bit up from 7% to 8% in your portfolio, but you had a very good letting performance in the first half of the year. So perhaps you can explain here a bit more. I assume the letting was more in the institutional business.

No, that's not the case. So the letting was as well in the commercial portfolio as in the institutional business.

Okay. But the vacancy rate is still a bit higher than it was before from 7.3% to 8.3% or something like this. And you mentioned in your debt maturity profile that there is a bank loan about EUR 72 million and still open. Do you assume that this is finished in the -- during the third quarter? And how do you judge at the moment the bank landscape and the willingness for commercial real estate loans? And how is the situation if the asset is not a green asset?

Okay. To the first question, so there is a timing difference, so to say, in the letting performance and in the, vacancy rate, yes, because we do the -- as you can imagine, we do the letting and then after some months when the letting is effective, the vacancy rate goes down. But at the end of the day, we mostly see renewals here. So as I said in the speech before and the renewals do not have an effect on the vacancy rate. So that's the main course here.

From the bank side, yes, you have right, we have EUR 77 million open thereof EUR 5 million are normal amortization. And the other one -- the other number reflects three refinancing we have to do during the last months here. One is due in September. So we already finished this negotiation very successfully. And the other two are due at the end of the year. And also there, we are in negotiations with different banks. So the most important or the most useful thing would be to refinance it with the existing bank, and that's in mostly cases what we are doing.

But we also ask other banks to get a -- to get a good offer. But at the end of the day, we see no problem here. The banks are very supportive here. And the last refinancing we have done without any equity bringing in. So that's in a good shape there.

Okay. Okay. My next question is about the refinancing of the EUR 400 million green bond, which is due in about 1 year in September '26. My best assumption for the moment would be that you might search for -- to bring down the debt and also to perhaps make a prolongation offer to the existing bondholders and also perhaps to replace a part of it by bank loans. So it's a mix of all and giving a prolongation offer to the existing shareholders which naturally which are with a higher interest rate. So is this the most likely case or the most likely scenario for the moment?

So as also said in the speech, we are here in different thoughts, but we don't have, yes, a solution -- a final solution found here. So at the end of the day, we are proving different options and maybe it would be a mix of some options, as you have said, but I could not say anything to this today. But I think you have to keep in mind that we have paid back or refinanced nearly EUR 800 million over the last 1.5 years. And I think this shows that we are able to negotiate such things and find solutions. And that's the case we are expecting also for the financial liabilities we have upfront in the next 12 to 18 months.

Okay. Okay. My last question is a very general question about the office market. In my view, we still have not too much transactions. And in my view, the German economy is still sluggish. The political situation all over Europe is still shaky and that makes it not easier. What's your impression for the moment? And what's your best case or your best scenario, what to happen, let's say, for the second half of the year and also for '26, you expect a strong upswing or it's more a gradual improvement?

Yes, that's an interesting question. So the crystal ball is still difficult to have here or to see. But at the end of the day, as you can read in the newspapers, the problem is that our chancellor is expected to be end for the outside negotiations, but not for the inside negotiations in Germany. And so the uncertainty is still there. And this uncertainty is difficult for the German business. So thereof within this uncertainty as well office as well as logistics as well as retail is still difficult.

So we see a lot of interest in letting as well as in sales from the outside. So there are outside guys who let or who want to do transactions. But at the end of the day, this is the transaction prices for offices are not there what they should -- where they should be in our perspective. And therefore, I think the transaction markets still remain not very busy over the next weeks.

I think at the end of the year, some of the guys say, Oh, end of the year is coming. We had some targets. We have to do something that's normal as always. And I think this will be also this year the case. But it is still difficult. And it's not as fast as we have expected and the market has expected and the uncertainty does not help here. But at the end of the day, as you can see in the letting, there is something going on, but it's difficult and it's time consuming and you have to negotiate very hard to do a good deal. That's definitely the case.

The next question comes from Markus Schmitt, ODDO BHF.

I have just one. And this concerns actually the earlier question on the bond maturity and the VIB AGM resolution. As part of the AGM, it was said that VIB is allowed to issue material debt. So is your plan now that VIB issues debt via a bond or Schuldschein or whatsoever in order to acquire additional assets from Branicks so that Branicks can meet the '26 bond maturity or that maybe VIB enters again into intercompany financing with Branicks to repay the bond? Would be helpful to receive some comments what the likely pathway is for meeting a bond maturity next year and if VIB will play a role here.

Thank you for the question. But as said, we are in discussions here. We are in a thinking process and we don't have a final solution here yet. And so I cannot say anything to this. Sorry for that.

The next question comes from Antonio Casari, Northlight.

First question is linked to the disposal target for the commercial portfolio of EUR 500 million to EUR 600 million. First, just to confirm, is that signed amount or closed amount? And secondly, can you help us bridge from the EUR 130 million in the first half to the EUR 500 million and EUR 600 million. I noticed that in the current trading update, you sold 2 or 3 assets for EUR 24 million already since Q2. And in addition to that, you mentioned you signed two logistics assets that you expect to close in late Q3, early Q4. Would be interesting to have the average amount -- some indication on the amount of proceeds expected on these two assets. But in general, it would be good to have some color on the bridge to reach the disposal target for commercial portfolio? Then I have another question.

Do you hear me? Yes, thank you for your question. So at the end of the day, today, we have around about EUR 130 million in place. The EUR 600 million is the signing number. So we always give our targets to signings. And we are in negotiations of the EUR 600 million. So we are very confident that we will get the EUR 600 million until the end of the year.

Sorry, the amount of negotiation is EUR 500 million or EUR 600 million?

Pardon?

The amount of -- you said you are in negotiation is?

Yes. Yes. We have -- today, we have finalized EUR 130 million roundabout. The role is EUR 600 million. And so we are in negotiations for the remaining EUR 470 million still in final discussions. But at the end of the day, we are very confident that we get the EUR 600 million until end of December.

Can you give us an indication on the size of the two logistic assets signed already?

We have signed two assets with around about EUR 30 million. Do you mean them or...?

I mean in the Q2 report, there is the disposal for EUR 24 million in the events post -- after closing of Q2. And on top of that, you said you signed the subsequent event. In addition, two notarization has been signed for the sale of two logistics properties, the...

And now I'm with you. These are EUR 170 million.

Okay. The two logistics.

Yes. So in total, half of the signing target is done there.

Okay. That's what I wanted to achieve. Okay. The second point is liquidity. So you have EUR 66 million of cash at the end of Q2, of which do I understand correctly, only EUR 38 million are now restricted?

Yes, that's right.

Which were EUR 66 million as of Q1. So you managed to get EUR 28 million restricted. Is that correct?

That's correct, yes.

Okay. Can you give us what happened there? Any explanation?

Yes, this was a guarantee, so to say, and this guarantee was the course of this guarantee has finished. And so the guarantee is free now. And therefore, it was...

Still, you paid EUR 68 million of promissory note at the end of July. So considering the amount of liquidity and even potentially the EUR 24 million of proceeds from the disposal of the offices, the balance is quite -- cash balance is quite high. So what's the balance -- cash balance pro forma for the repayment of the EUR 68 million of promissory note? Or did you raise some debt to repay those promissory notes?

No, we didn't raise debt for this promissory note. It was paid back from our operational liquidity.

Okay. And very last question. I saw that you raised EUR 58 million of new financing in the first half of the year from the cash flow again in the financial statements. Are those mortgages on unencumbered assets or...?

No, these are the refinancing from our real estate from the assets, so to say. So we show them so called. So we pay back the existing liability and get the new one in. So...

So these are only rolled financing, no additional financing.

Yes, yes. Rolled financing.

[Operator Instructions]

The next question at this point comes from Thomas Neuhold, Kepler Cheuvreux.

I have three questions. The first one is on OpEx. You made very good progress on bringing down OpEx further in the first half. What is the outlook for the OpEx development? And do you see further potential to cut costs? That's the first question, and I think let's take them one by one.

So we expect for a total year around about EUR 54 million in total for the OpEx costs.

And the next question is on the like-for-like rental growth. Can you provide more color on what was driving this like-for-like rental growth, specifically which part comes from inflation adjustment and which from vacancy change and which from the reletting performance?

It's around about 50% of each of it.

Okay. And my last question is on financing costs. I was wondering if you can give us an indication what kind of spreads the banks are currently demanding for secured financing and if there have been any changes in the recent months versus before?

Yes, we are in the range of around about 3.7% to 4.3% for the refinancing.

The next question comes from [indiscernible].

I have only one question related to the maturities. Could you please explain also the plans for the maturing promissory notes in 2026 over EUR 100 million?

Yes, the plans are to pay them back.

I mean also with the, let's say, sources like with the refinancing or with the disposals or a combination, if there is a bridge in order to conclude the payments.

Yes. As I said, the same discussion as for the bond. So we are in discussions or we are improving what can be done and improving the options. And so at the end of the day, it will come from, I think, more or less operational business. But at the moment, we have not finalized the 2026 plan. So yes, that's what I can say at the moment.

The next question comes from Nikki Kouzmanov of Jefferies.

[Technical Difficulty]

We can't hear you.

I guess I wanted to ask around the disposal target, the EUR 500 million, EUR 600 million of the commercial portfolio. So if that's achieved this year, and I don't know how much bank debt would be associated with those assets. But the use of those proceeds, there's only the sort of the EUR 144 million left of Schuldschein in next year before the bonds or the majority of it before the bonds. Can we sort of start thinking about maybe some sort of a dividend that can be paid or anything like that? I know at the AGM a couple of weeks ago, VIB, for example, elected for a dividend. Yes, very small. But just I'm sort of just thinking about the size of the proceeds versus the upcoming maturities is pretty significant. And other than debt paydown, is it also time to think about maybe a distribution to shareholders as well?

Thank you for your question. So as I said on the annual meeting, we want to be a dividend-paying company, but I don't think that we could be one next year. So we have to work on our liabilities, and there are some high liabilities to pay back next year. And therefore, this would be the first priority. And we would like to come back to net profit at the end of 2026 and later. And I think then we will be back to pay dividends, but I don't expect it for next year.

The next question comes from Philipp Kaiser, Warburg Research.

Just one question regarding your loan-to-value. You already sold a bunch of assets. You already paid down a significant amount of debt, but your LTV marginally moved downwards. So what needs to be happen, what needs to be done that we can see a significant reduction of the LTV towards your midterm goal of around 50% or even below 50%?

Yes, that's a good question. So at the end of the day, it all remains on the evaluation. And therefore, I think we have reached a peak end of last year. And also the transaction markets are not there what we wanted them to have or what we have expected. I stay with the idea that the evaluation will not extensively go down going forward. And therefore, I think that's a good sign for us and also for the relating market prices coming from these evaluations in the market. And therefore, that's the main goal to get the evaluation up or to get them stay where they are. And it all depends on the letting and on the interest in German assets, so to say.

And to come back to my speech, definitely, we are not there what we have expected beginning of the year. But what we see is that foreign investors are having more and more interest in the German market and the transaction market is done by foreign investors, so to say. And therefore, I think to come back, the evaluation will stay on this level and hopefully go a little bit up at the end of the year or beginning of next year in general. And then we will see the LTV going down. So that's the idea what we have on this side.

Okay. So thank you very much, everyone. As there are no further questions at this point, I'd like to hand it back to Jasmin Dentz.

Perfect. Thank you so much. So this concludes our Q&A session and our call. Thank you so much for joining us today. Our next IR highlight will be the publication of our Q3 results on November 6. So stay healthy, and let's talk again soon.

Thank you. Bye.