Deutsche Euroshop Stock

Ladies and gentlemen, welcome to the Financial Results Full Year 2025 Conference Call. I am Matilda, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Hans-Peter Kneip. Please go ahead.

Thank you, Matilda. Good morning, ladies and gentlemen, and morning from Hamburg. This is Hans-Peter Kneip speaking. I'm pleased to welcome you to today's conference call and to present our financial results for the fiscal year 2025, along with an update on the company's recent developments and achievements. Rest assured, there are no April fools jokes today. Instead, we have transparent and solid results. And as always, I will be happy to answer your questions following my brief presentation. On behalf of my entire team, thank you for taking the time and for your continued interest in Deutsche EuroShop.

Let me start with an update on our business activities on Slide 2. Compared to 2024, we have seen a modest decrease in footfall of 0.4%, whereas our tenants achieved an increase of 2.2% in their sales. After a subdued first quarter, there has been since a positive trend in both visitor numbers and tenant sales. I will provide further details, including a breakdown by sector in a moment. Revenues came down slightly by 0.4% to EUR 270.4 million. EBIT has decreased by 0.2 -- 0.9% to EUR 214.4 million and FFO by 9.2% to EUR 147.6 million.

Despite higher contractual rents, rental incentives granted as well as lower revenue from land tax apportionments and insurance expense resulted in revenues below the previous year. Additionally, one-off expenses arising from non-apportionable ancillary costs as well as increased financing costs led to overall lower results. This comes as no surprise. The results are fully in line with our latest forecast. I'm also pleased to inform you that our major investment projects in the Main-Taunus-Zentrum and the Rhein-Neckar-Zentrum have been completed on schedule and within budget, and are contributing to the center's success.

I will provide further details on this later. Switching to Slide 3. In terms of funding, we are in a comfortable position. Following the latest financing measures and dividend payments, the LTV stands at 41.3% and liquidity at EUR 387.4 million. As you know, we paid out a dividend of EUR 2.65 per share, a total of EUR 200.7 million in early July last year. For financial year 2025, we intend to propose a dividend of EUR 1 per share to the AGM. Our funding position remains stable. The refinancings for our loans due in 2026 were already completed in the last weeks, and we have no substantial maturities to refinance until 2028.

In June 2025, we've successfully placed our first green bond with an aggregate nominal amount of EUR 500 million. The bond has a term of 5.3 years until October 2030 and an annual interest rate of 4.5%. The issue attracted strong investor interest and was 7x oversubscribed, underscoring Deutsche EuroShop's attractiveness as a borrower. The bond is listed on the Euro MTF market of the Luxembourg Stock Exchange. Prior to the bond issue, Deutsche EuroShop received a long-term issuer rating of BB+ from S&P. The new bond is rated BBB- by S&P, reflecting our solid investment-grade credit profile.

I will now move on to Slide 4. Deutsche EuroShop is taking forward-looking steps, not only in the area of sustainable financing. Last autumn, we published comprehensive ESG policies, which you will find on our website. Our new ESG policies include a code of conduct for employees and a code of conduct for business partners and suppliers as well as topic-specific policies on climate protection and energy, water and environmental protection and waste. A guideline on the use of artificial intelligence is also currently being developed.

Coming to Slide 5. We are well advanced in optimizing our capital and financing structure. With the publication of our green finance framework last June, we created the basis for the possible use of green financing instruments. The framework has been rated excellent by sustainable Fitch, which is the highest possible rating. Yesterday, we published the corresponding allocation and impact report. Among other things, this report includes the net proceeds allocation of last year's bond issued to certified green buildings and impact reporting as well as some case studies.

On Slide 6, we take a closer view at our centers. Looking at the last quarter of 2025, we have seen a minus of 0.7% in footfall and a plus of 1.8% in turnover. As already mentioned, in 2025 in total, we saw a minus of 0.4% in footfall and a plus of 2.2% in retail sales. A subdued first quarter, mainly due to seasonal factors, was more than offset by promising second and third quarters with distinctly positive footfall and turnover. We had anticipated slightly better results from the fourth quarter, particularly during Black Week and the run-up to Christmas, but overall, the quarter still proved satisfactory.

I probably don't need to tell you that the consumer environment remains challenging, influenced, among other things, by further volatile political developments and geopolitical conflicts. However, we are seeing a moderate improvement in consumer sentiment and an increase in our tenant sales, particularly in our foreign markets. German consumers remain cautious and continue to spend comparatively little in retail compared to other European countries. In this respect, our portfolio may benefit from a catch-up effect if the consumer climate improves in Germany as well. This could be triggered by resurgence in economic growth, for example, as a result of the structural measures and investment programs by the new federal government, which has been in office for almost 1 year now. On the other hand, there is the ongoing war with Iran, which may have longer-term implications for inflation and interest rates that are currently very difficult to assess.

Regardless of this, we and our tenants are looking ahead to 2026 with optimism. I would now like to take a closer look at the individual retail sectors and their development in Germany in 2025 on Slide 7. This overview shows not only the development of turnover in the individual sectors, but also the respective share of total tenant turnover and floor space as well as the occupancy cost ratio. Compared to the end of 2024, our tenants in the German portfolio in the Health and Beauty segment performed well, achieving a 2.8% increase in sales. In particular, drugstores and pharmacies like [indiscernible] are the main drivers here and continue their success story.

Electronics achieved a plus of 1.1% in sales and food, including supermarkets and discounters generated 0.8% higher sales. Our largest tenant group with a share of 28% of sales and 41% of retail space in Germany is fashion textiles, which ended the year 2025 with a slight decrease of minus 0.5%. General retail, which includes bookstores, toys, household goods and jewelry as well as department stores ended with minus 0.4%. Shoes and leather goods, sports and services have ended 2025 in the red. Overall, our tenants in Germany increased their like-for-like sales only slightly by 0.1%, while our tenants abroad ended more positive at plus 3%.

In total, we have seen an increase of 0.8% across our entire portfolio. In absolute terms, our tenants generated 2.2% higher sales, as already outlined previously. And finally, this page shows that the average occupancy cost ratio, the so-called OCR, which is the ratio of rents and ancillary costs to be borne by our tenants relative to their revenues is 11.3%, a healthy ratio that enables our tenants to be successful in our shopping centers over the long term and that shows you that our portfolio is well balanced and not over-rented.

Please follow me now to Slide 8 for a look at the maturity distribution of our rental contracts. The weighted maturity of the portfolio stands slightly higher at 4.9 years. 41% of our rental contracts only mature in 2031 or onwards. The occupancy rate increased by 0.3 percentage points to 95.7% and stands at a high level. On Slide 9, you will find our top 10 tenants with again only minor changes. Our biggest tenant, H&M, has a share of 2.6%, followed by Deichmann and CNA with 2.5% each. The 10 largest tenants only account for 22.5% of our rental income.

Our sector mix, as shown on Slide 10, confirms our balanced sector diversification. Fashion remains a focal point of our shopping centers, and it attracts as many customers as ever. Beyond fashion, our portfolio offers a retailing mix with a high component of groceries, daily necessities and further nondiscretionary spend retailing. This is a strong advantage and visitors particularly appreciate our well-balanced tenant mix even or especially in an era of growing online retail.

Contrary to popular belief, a well-curated fashion offering remains a strong draw for visitors, creating positive spillover effects for other retail segments within our centers. At the same time, we are actively working to further diversify our sector mix by expanding gastronomy and entertainment options, which are equally popular and contribute to longer visitor dwell times. That concludes my update on the current situation in our shopping centers.

I would now like to present the financial results for 2025 and would like to start by addressing the valuation of our investment properties on Slide 11. Property values experienced a slight improvement in 2025. Due to rising rent levels, property valuations stabilized during the reporting year. And after several years of declining valuations, the property portfolio saw a slight increase in value with a valuation gain of EUR 14.4 million compared to a valuation loss of EUR 14.6 million in the previous year.

Mainly as a result of this valuation gain as well as investments into the portfolio, the market value, excluding at equity increased by EUR 54 million. Real estate assets increased in value by 1.4% in 2025 after 0.7% in 2024. The net initial yield for our portfolio stands at 6.22%, slightly below the previous year. The EPRA net initial yield stands at 5.89%, up from 5.84% in 2024. The sensitivity of the valuation results to changes in the main value drivers is shown in the table in the lower right part of this slide.

Let us now look at the revenues on Slide 12. This came out slightly lower at EUR 270.4 million after EUR 271.4 million in 2024. This is a decrease of 0.4%. While contractual rents increased, revenue from rental income fell slightly overall due to rental incentives granted to tenants, including construction cost subsidies and rent-free periods. Mainly due to the property tax reform, German Grundsteuerreform, the revenue from property tax apportionments and insurance expenses decreased by EUR 1.8 million.

The breakdown between Germany and abroad has shifted slightly in favor of foreign countries where we now have a 22% share. For our EBIT, let's have a look at Slide 13. With a slight decrease of 0.9%, our EBIT came out at EUR 214.4 million. The main driver here were increased center operating expenses due to one-off expenses related to non-apportionable ancillary costs associated with the renewal of technical equipment and the storm damage, which was reimbursed by the building insurance.

Noteworthy is that property tax expenses have fallen sustainably due to the already mentioned tax reform. On Slide 14, we come to the financial result, which decreased by 30.4% or EUR 15.5 million and came down from minus EUR 51.1 million to minus EUR 66.7 million. Interest expenses increased by EUR 13.5 million due to the interest on our inaugural green bond, loan increases in the prior year as well as higher interest rates for follow-on loans. The other financial result includes interest income as well as EUR 2.7 million expenses for the termination of swaps in the course of the early repayment of loans.

On Slide 15, you can see that the EBT, excluding valuation, came down from EUR 165.2 million to EUR 147.8 million, which is a minus of 10.5%. This reduction was caused by the downturn in the financial result, mainly due to the increase in interest and other financial expenses. The interest income from short-term bank deposits was below the prior year at EUR 4.6 million. Our consolidated result on Slide 16 increased by 74.2% from EUR 123.5 million to now EUR 215.1 million, mainly due to a higher valuation result and lower taxes.

Correspondingly, EPS increased from EUR 1.62 to EUR 2.84. Please follow me now to Page 17 and to the development of the FFO. The FFO decreased from EUR [ 116 ] million to now EUR 147.6 million or on a per share basis from EUR 2.14 to EUR 1.95 due to the lower EBIT as well as the lower financial result. Let me now turn to the balance sheet, which you will find on Page 18. Our total assets after the bond issue in June amount to EUR 4.6 billion. This is an increase of EUR 239.4 million compared to the reporting date end of 2024, basically due to an increased cash balance as well as the slight increase in property values.

As of 31st December 2025, current and noncurrent financial liabilities stood at EUR 2.1 billion, which was EUR 283 million higher than at the end of 2024, in particular, due to the EUR 500 million bond issued in June. Loans in the total amount of EUR 208.5 million have been repaid mainly using bond proceeds. Among partial repayments, the loans of Herold-Center Norderstedt and Stadt-Galerie, Hameln have been fully repaid.

Our consolidated cash and cash equivalents as of 31st December 2025 stand at EUR 387.4 million. That is a plus of EUR 175 million compared to the previous year. This is mainly driven by the bond proceeds on the one hand and the dividend payment of EUR 200.7 million and the already mentioned loan repayments on the other. Noncurrent deferred tax liabilities decreased by EUR 59.6 million to EUR 291.3 million, basically due to the gradual reduction of the German corporate income tax rate from currently 15% to 10% in 2032. Total equity, including noncontrolling interest, increased by EUR 24.4 million. Our equity ratio decreased to 47.1% and the consolidated LTV now stands at 41.3%. The EPRA LTV calculated proportionally according to the group share in all assets, so to say, on a look-through basis, stands at 43.4%.

On Slide 19, we have our EPRA NTA, which due to the dividend payment of EUR 200.7 million decreased to now EUR 28.45 on a per share basis. That is a minus of 2% compared to the previous year and implies a discount of around 29% to the Deutsche EuroShop share price. On Page 20, let me give you some updated information on our financing structure. As just shown in the balance sheet, total debt amounts to EUR 2.1 billion. On 31st December 2025, our average interest rate stood at 3.2% and the weighted maturity at a comfortable 4.9 years. After issuing our EUR 500 million bond in June, we remain in a good position with strong and sustainable investment-grade credit metrics, including an LTV of 41.3%, net debt-to-EBITDA of 7.6x and interest coverage of 4.2x.

On the right-hand side, you can see Deutsche EuroShop's long-term diversified maturity profile in more detail, now including the bond maturing on 15th October 2030. All refinancings due in 2026 have already been completed. And given only minor maturities in 2027, larger refinancing obligations do not arise until 2028. We summarized the key details of our green bond on Slide 21. We reached a financial milestone by attaining a corporate rating and tapping the capital market for future corporate financing. By successfully placing our first bond in June, we have expanded our sources of funding and diversified our financing structure.

The EUR 500 million bond was 7x oversubscribed, reflecting the confidence that institutional investors place in the retail real estate market and Deutsche EuroShop in particular as well as their willingness to invest in our shopping centers as eligible sustainable projects in line with our green finance framework. Coming to a portfolio update on Slide 22. The Food garden is the new highlight of the Main-Taunus-Zentrum near Frankfurt, giving it a lively and urban atmosphere. The high-quality varied restaurant and food area opened last April.

The Food Garden was built on an area of around 7,000 square meters in the heart of the shopping center in place of a former department store building at high sustainability standards. The Food garden is fully let to high-quality tenants. Those of you who have not yet had the opportunity should check out the project on site. Our IR team is happy to provide guided tours as well. The feedback from customers and tenants is excellent and is impressively reflected in the center's footfall. Visitor numbers went up by 12% since the opening.

By the way, this area is open 7 days a week and is also very popular on Sundays. On Slide 23, we have an update on the Rhein-Neckar-Zentrum close to Mannheim. A larger investment project has been completed, and the center expanded with attractive tenants in gastronomy, sports and entertainment. Since February 2025, a new and modern freestanding L'Osteria provides highlights from the Italian kitchen to our visitors. In addition, 3 exciting tenants moved into the renovated former powerhouse building, providing plenty of retailtainment, as we say.

The Trampoline Park and a successful cycling store are each an attraction. An interactive indoor entertainment, a so-called family action concept with a dark light mini golf course and an escape room experience opened just before Christmas. Only a few meters away, you can find an indoor skydiving center, which is running very successfully. These tenants are positively benefiting from each other, and we expect further synergies with the adjacent existing cinema and restaurants, giving the entire center a further boost. This new leisure area has been given a name that sums up the diversity and vibrancy of the location, the food and fun park.

Starting from Slide 24, I would like to provide more details on our ESG initiatives as climate protection remains a top priority for Deutsche EuroShop. We firmly believe that sustainability and profitability are not mutually exclusive. Just as a compelling shopping experience and environmental responsibility can go hand-in-hand. We closely monitor our carbon dioxide emissions and electricity consumption and take actions to reduce these in the future. And as you know, we actively support a diverse range of local and regional initiatives across environmental, social and economic areas.

On Slide 25, you can see that 20 of our 21 properties currently have the prestigious gold certificate from the German Sustainable Building Council, and one has been awarded Platinum. Since 2025, all 21 sites have been fully powered by electricity from renewable energy sources with all domestic sites being supplied under power purchase agreement. And we have been awarded the Sustainability Best Practice Recommendations Gold Award by the EPRA for the ninth time in a row now.

Finally, I would like to come to Slide 26 and the outlook. For the 2026 financial year, we are again publishing a guidance for our most important key figures: revenue, EBIT, EBT and FFO. On the operational side, we expect a positive development in the 2026 financial year and anticipate a slight upward trend in both revenue and EBIT. For EBT, excluding measurement gains or losses and FFO, we expect a slight decline compared to the 2025 financial year due to a planned lower financial result. In more detail, we forecast funds from operation of EUR 1.77 to 1.89 -- EUR 1.87 per share or in total between EUR 134 million and EUR 142 million.

This forecast is based on an expected revenue between EUR 269 million and EUR 277 million, and EBIT from EUR 211 million to EUR 219 million and an EBT excluding valuation from EUR 134 million to EUR 142 million.

Ladies and gentlemen, thank you very much for the trust you place in Deutsche EuroShop. We look back on an encouraging year 2025. And although the geopolitical and economic environment remains challenging with room for improvement in the retail sector, there are good reasons to be optimistic for 2026. You can rely on us to continue investing in our shopping centers in a targeted, strategic and sustainable manner to create future value for our shareholders. That concludes my presentation. Thank you for your attention. I'm now happy to take your questions. Matilda, back to you.

[Operator Instructions] The first question comes from the line of [ Christian Ozan ] from Alpha Value.

It's about the incentives you've recorded in '25 and more than that about the trend on incentives through '26 or just to try to capture the tension in the market and in your shopping malls. And the second question in the similar line is about what you consider being the occupancy ratio that can push you or be sufficient to push higher rents and if it could occur in '26?

Yes. Thanks very much, Christian, for those two questions. So correct observation. Obviously, we have increased our rental incentives, such as rent-free periods and also some building cost subsidies over the last 1 or 2 years in order also to increase the occupancy rate and make our centers more attractive.

And those have driven down our revenues in 2025. We still do see a slight upward tick needed, but are then pretty confident that those will stabilize at a similar level for the coming years, which leads to your second question, which is occupancy ratio. As you may know, to Deutsche EuroShop, it always has been very important to have our centers very attractive, close to fully let in order to then, on this basis, push for higher rents. So that's the strategy going forward.

So now you've seen that the occupancy has increased to 96% to 95% according to EPRA, so pretty similar. So therefore, yes, I do think we have reached a good level, may need a little bit more potentially in terms of demand pressure that we then also can increase rents going forward, maybe a bit more ambitiously. For the moment, you have seen that our rents are increasing, but rather slowly. But we do think with even more occupancy where those incentives given to the tenants help us, we can increase rents a little bit further in 2026 and hopefully more so in 2027. I hope, Christian, this answers your question.

[Operator Instructions] the next question comes from the line of Thomas Neuhold from Kepler Cheuvreux.

I have three. The first one is on the potential behavior of consumers if we see a prolonged Iranian conflict. What do you think how the consumer will behave? And what retail sectors might be particularly affected by a longer crisis? That's the first question.

Yes. Thomas, thanks for this question. Obviously, the Iran conflict has a dampening effect on consumption across Europe. But I think it's less an issue for Deutsche EuroShop at least at the moment. You've seen that the consumption trend in Germany has been very low already. So we don't expect it to shrink it even further because of because of Iran.

But what may happen is that kind of the -- I talked about it during my presentation that we do see upside from catch-up effects, especially from Germany, that it may take a little longer before those are taking effect if the Iran war takes a longer time. And obviously, what's still unclear at the very point of time is how inflation will be triggered in the longer term by the Iranian war. So in a nutshell, so no significant downside to be seen at the moment, but the recovery that we foresee for our German portfolio may take a little bit longer if the Iran war continues.

And then my second question is on your CapEx requirements in '26 and '27, particularly, are there still any shop beautification projects in the pipeline? Can you give us an update here?

Yes. So in terms of CapEx, you know that we have increased our CapEx expenditures over the past 2 years, especially also we do foresee higher CapEx requirements also in the future. That's what you mentioned on the one side is beautification. But on the other side, it's also to realize where we can project to further diversify our tenant mix, especially in gastronomy, entertainment. You've heard a few examples today.

And we do see a few other centers where this could prove very beneficial for the further development of revenues and footfall. So therefore, you can expect also for this year, higher CapEx which may be once again, close to EUR 40 million, plus/minus EUR 10 million depending on the individual projects, but it will remain higher also in this year and the coming year.

And my last question is on cost inflation. What have you modeled in, in your guidance for this year?

In terms of cost inflation, we do see a slight increase in overall inflation. So the kind of 2.2%, which we have seen in Germany in the last year, given the recent events may be a bit higher. So -- but we haven't adjusted our forecast to a new number yet. So we do think it will certainly be higher than 2% because already now, it becomes visible that due to geopolitical conflicts, especially the Iran war, energy prices may be higher for longer, and this certainly has an impact on the entire inflation numbers.

It's a little bit early to give concrete guidance on the cost inflation expected, but it would certainly be higher than the 2% that we -- that many investors have in their models right now.

[Operator Instructions] ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Hans-Peter Kneip for any closing remarks.

Ladies and gentlemen, thank you very much for your interest and for your questions. As always, please feel free to contact our IR team should you have any further inquiries. We hope to see you soon at future investor or retail events or even better in one of our shopping centers. All the best and choose from Hamburg.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.

Ladies and gentlemen, welcome to the Quarterly Statement 9 Months 2025 Conference Call. I am Valentina, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Hans-Peter Kneip. Please go ahead.

Thank you, Valentina. Good morning, ladies and gentlemen, and morning from Hamburg. This is Hans-Peter Kneip speaking. I'm pleased to welcome you to today's conference call and to present our financial results for the first 9 months of our fiscal year 2025, along with an update on the company's recent developments and achievements. As always, I will be happy to take your questions following my brief presentation.

On behalf of my entire team, thank you for taking the time and for your continued interest in Deutsche EuroShop. Let me start with an update on our business activities on Slide 2. Compared to the first 9 months of 2024, we have seen a modest decrease in footfall of 0.2%, whereas our tenants achieved an increase of 2.2% in their sales. After a subdued first quarter, there has been a positive trend in both visitor numbers and tenant sales.

I will provide further details, including a breakdown by sector in a moment. Despite increasing rents, our revenues came down by 1.3% to EUR 197.4 million. EBIT has decreased by 4.5% to EUR 155.4 million and FFO by 12.8% to EUR 108.8 million. The lower results are attributable to higher deferrals, one-off allocation and cost effects and increased financing costs in particular. This comes as no surprise.

The results are largely in line with our planning and forecast, which we refine as usual with the 9-month figures and which I will discuss at the end of my presentation. I'm also pleased to report that our larger investment projects at several locations were completed on time and within budget, and I'll share further details on these later.

Switching to Slide 3. In terms of funding, we are in a comfortable position after the latest financing measures and dividend payments with an LTV of 42% and a cash position of EUR 376 million. As you know, we paid out a dividend of EUR 2.65 per share, a total of EUR 200.7 million in early July this year. Our funding position remains stable and all financing schedules for this year have been completed.

Our next loan is only due in June 2026, and an early extension is already in the works. In June, we successfully placed our first green bond with an aggregate nominal amount of EUR 500 million. The bond has a term of 5.3 years until October 2030 and an annual interest rate of 4.5%. The issue attracted strong investor interest and was 7x oversubscribed, underscoring Deutsche EuroShop's attractiveness as a borrower.

The bond is listed on the Euro MTF market of the Luxembourg Stock Exchange. Prior to the bond issue, Deutsche EuroShop received a long-term issuer rating of BB+ from S&P. The new bond is rated BBB- by S&P, reflecting our strong investment-grade profile.

I'll move on to Slide 4. Deutsche EuroShop is taking forward-looking steps, not only in the area of sustainable financing. Yesterday, we published comprehensive ESG policies, which you will find on our website. Our new ESG policies include a code of conduct for employees and a code of conduct for business partners and suppliers as well as topic-specific policies on climate protection and energy, water and environmental protection and waste.

On Slide 5, we take a closer view at our centers. Looking at the third quarter of this year, we have seen a plus of 1.4% in footfall and 3.9% in turnover. As already mentioned, in the first 9 months of 2025, in total, we saw a minus of 0.2% in footfall and a plus of 2.2% in retail sales. This reinforces the positive trend we had already observed in the second quarter of the year.

I probably don't need to tell you that the consumer environment remains challenging, influenced, among other things, by volatile political developments and geopolitical conflicts. However, we are seeing an improvement in consumer sentiment and an increase in our tenant sales, particularly in our foreign markets. German consumers remain more cautious and continue to spend comparatively little in retail compared to other European countries.

In this respect, our portfolio may benefit from a catch-up effect if the consumer climate improves in Germany as well. This could be triggered by a resurgence in economic growth, for example, as a result of structural measures and investment programs by the new federal government, which has been in office since May this year. Regardless of this, we and our tenants are looking ahead to the year-end and Christmas business with optimism. The peak shopping season will start in the next few days.

I would now like to take a closer look at the individual retail sectors and their development in Germany in the first 9 months of 2025 on Slide 6. This overview shows not only the development of turnover in the individual sectors, but also the respective share of total tenant turnover and floor space as well as the occupancy cost ratio. Compared to the end of 2024, our tenants in the German portfolio in the Health & Beauty segment performed well, achieving a 4.2% increase in sales.

In particular, drugstores and pharmacies like drogerie markt are the main drivers here and continue their success story. Our largest tenant group with a share of around 28% of sales and 41% of retail space in Germany is fashion textiles, which was able to achieve a slight increase of 0.2%. Food, including supermarkets and discounters generated 0.7% higher sales as did general retail, which includes bookstores, toys, household goods and jewelry as well as department stores.

On the opposite side, shoes and leather goods, sports, electronics and services have ended the first 9 months in the red. Overall, our tenants in Germany increased their like-for-like sales by 0.2%, while our tenants abroad ended more positive at plus 2.3%. In total, we have seen an increase of 0.7% across our entire portfolio. In absolute terms, our tenants generated 2.2% higher sales, as already outlined previously.

And finally, this page shows that the average occupancy cost ratio, the so-called OCR, which is the ratio of rents and ancillary costs to be borne by our tenants relative to their revenues is 11.3%, a healthy ratio that enables our tenants to be successful in our shopping centers over the long term and that shows you that our portfolio is well balanced and not over-rented.

Let us now turn to the financials and look at our revenues on Slide 7. These came out slightly lower at EUR 197.4 million after EUR 200 million in the first 9 months of 2024. This is a decrease of 1.3%. While contractual rents increased, revenue from rental income fell slightly overall due to rental incentives granted.

Mainly due to the property tax reform in German, Grundsteuer reform, the revenue from property tax apportionments and insurance expenses decreased by EUR 1.2 million. The breakdown between Germany and abroad has shifted slightly in favor of foreign countries where we now have a 22% share.

For our EBIT, let's have a look at Slide 8. With a decrease of 4.5%, our EBIT came out at EUR 155.4 million. A main driver here were increased shopping center operating expenses due to one-off expenses related to non-apportionable ancillary costs associated with the renewal of technical equipment. Noteworthy is that property tax expenses have fallen sustainably due to the already mentioned property tax reform.

On Slide 9, we come to the financial result, which decreased by 13.8% or EUR 10 million and came down from minus EUR 37.8 million to minus EUR 47.9 million. Interest expenses increased by EUR 8.8 million due to loan increases in the second and third quarter of the prior year, higher interest rates for follow-on loans as well as the interest on our inaugural bond.

The other financial results includes interest income as well as EUR 2.7 million expenses for the termination of swaps in the course of the early repayment of the underlying loans for Stadt-Galerie Hameln and Stadt-Galerie-Passau.

On Slide 10, you can see that the EBIT, excluding valuation, came down from EUR 125 million to EUR 107.5 million, which is a minus of 13.9%. This reduction was caused by the downturn in EBIT, mainly due to higher center operating expenses as well as in the financial result. As mentioned, the main effect was the increase in interest expenses.

The interest income from short-term bank deposits was below the prior year at EUR 3.3 million. Our consolidated profit was EUR 11.0 million, increased by 13.3% from EUR 82.5 million to now EUR 93.5 million, mainly due to a higher valuation result. Correspondingly, EPS increased from EUR 1.08 to EUR 1.

23. Please follow me now to Page 12 and to the development of the FFO. The FFO decreased from EUR 124.7 million to now EUR 108.8 million or on a per share basis from EUR 1.64 to EUR 1.44 due to the lower EBIT as well as the lower financial result.

Let me now turn to the balance sheet, which you'll find on Page 13. Our total assets after the bond issue amount to EUR 4.55 billion. This is an increase of EUR 186 million compared with the reporting date end of 2024. We fully repaid the loans for Herold-Center Norderstedt and Stadt-Galerie Hameln in June; together, EUR 143.1 million and partly repaid a loan of EUR 34.5 million for Stadt-Galerie-Passau in August.

Our consolidated liquidity as of 30th September 2025 stands at EUR 376 million. That is a plus of EUR 163.6 million. Please keep in mind that we paid out a dividend of EUR 200.7 million in early July. Total equity, including noncontrolling interests, decreased by EUR 101.5 million. As at 30th September 2025, current and noncurrent financial liabilities stood at EUR 2.1 billion, which was EUR 287.6 million higher than at the end of 2024, in particular, due to the EUR 500 million bond issue issued in June.

Noncurrent deferred tax liabilities increased by EUR 13.9 million to EUR 364.7 million. Our equity ratio decreased to 44.9% and the consolidated LTV now stands at 42%. The EPRA LTV calculated proportionally according to the group share in all assets, so to say, on a look-through basis, stands at 44.2%.

On Page 14, let me give you some updated information on our financing structure. As just shown in the balance sheet, total debt amounts to EUR 2.1 billion. On 30th September, our average interest rate stood at 3.2% and the weighted average maturity at comfortable 5.2 years. After issuing our EUR 500 million bond in June, we remain in a good position with strong and sustainable investment-grade credit metrics, including an LTV of 42%, net debt-to-EBITDA of 8x and interest coverage of 4.3x.

On the right-hand side, you can see Deutsche EuroShop's long-term diversified maturity profile in more detail, now including the bond maturing on 15th October 2030. Our next refinancing obligations do not arise until mid-2026, and we continue to refinance cautiously and early as always.

We summarized the key details of our green bond on Slide 15. We reached a financial milestone by attaining a corporate rating and tapping the capital market for future corporate financing. By successfully placing our first bond in June, we have expanded our sources of funding and diversified our financing structure.

As already highlighted, the EUR 500 million bond was 7x oversubscribed, reflecting the confidence that institutional investors place in the retail real estate market and Deutsche EuroShop in particular, as well as the willingness to invest in our shopping centers as eligible sustainable projects in line with our green finance framework, which we have summarized on the following page, Slide 16.

We are well advanced in optimizing our capital and financing structure. With the publication of our green finance framework, we created the basis for the possible use of green financing instruments in the future. The framework has been rated Excellent by Sustainable Fitch, which is the highest possible rating.

Coming to some news on our portfolio on Slide 17. The Food Garden is the new highlight of the Main-Taunus-Zentrum near Frankfurt, giving it a new lively and urban atmosphere. The high-quality varied restaurant and food area opened in April. The Food Garden was built on an area of around 7,000 square meters in the heart of the shopping center in place of a former department store building at high sustainability standards. The Food Garden is fully let to high-quality tenants.

Those of you who have not yet had the opportunity to check out the project on site, our IR team is happy to provide guided tours as well. The feedback from customers and tenants is excellent and is impressively reflected in the center's footfall. Visitor numbers went up by 17% since the opening. By the way, this area is open 7 days a week and is also very popular on Sundays.

On Slide 18, we have an update on the Rhein-Neckar-Zentrum close to Viernheim. A larger investment project has just been completed and the center expanded with attractive tenants in gastronomy, sports and entertainment. Since February, a new and modern freestanding L'Osteria provides highlights from the Italian kitchen to our visitors. In addition, 3 exciting tenants moved into the renovated former Bauhaus building, providing plenty of retailtainment, as we say.

A trampoline park and a successful cycling store are each an attraction. An interactive indoor entertainment, so-called family action concept with a dark light mini golf course and an escape room experience will open next week. Only a few meters away, you can find an indoor skydiving center, which is running very successfully.

These tenants are positively benefiting from each other, and we expect further synergies with the adjacent existing cinema and restaurants, giving the entire center a further boost. This new leisure area has been given a name that sums up the diversity and vibrancy of the location, the Food and Fun Park. This new branding will become visible in the coming weeks.

Finally, I would like to come to Slide 19 and the forecast and outlook. In light of the developments over the first 9 months of the year, we are refining our forecast for the financial year 2025. We expect revenue to be in the lower range and EBIT and FFO in the middle range of the original forecast. EBT, excluding valuation, is expected to be slightly below the original forecast, partly as a result of the increase in interest expenses due to the adjusted financing structure.

In detail, we expect a revenue of EUR 268 million to EUR 273 million, previously EUR 268 million to EUR 276 million; an EBIT of EUR 211 million to EUR 216 million, previously EUR 209 million to EUR 217 million; an EBT excluding valuation of EUR 144 million to EUR 149 million, previously EUR 150 million to EUR 158 million; and finally, an FFO of EUR 146 million to EUR 151 million, previously EUR 145 million to EUR 153 million.

Ladies and gentlemen, thank you for the confidence you have in Deutsche EuroShop. We expect the recent positive trend to continue for the rest of the year. Although there is certainly room for improvement in the overall retail environment, there are good reasons to be optimistic for the rest of 2025 and the coming year 2026. You can rely on us to continue investing in our shopping centers in a targeted, strategic and sustainable manner to create future value for our shareholders.

Ladies and gentlemen, in light of our company's recent development, we can look back on an encouraging first 9 months of 2025. We appreciate your continued support and engagement. That concludes my presentation. Thank you for your attention.

I'm now happy to take any questions. Valentina, back to you.

[Operator Instructions] The first question comes from Kai Klose from Berenberg.

A few questions from my side. First of all, some basic questions on the portfolio. What were the occupancy levels as of 9 months? And what was the rent collection rate for the 9 months?

Yes. Thanks, Kai, for this question. For the first 9 months, we had an occupancy of around 95% and the collection rate was again close to 99%.

And occupancy levels have changed in which way?

Well, they have somehow improved. You have seen that in the half year, we were around 94.5% occupancy rate. So now we are at around 95%. So it has improved somewhat over the last 3 months. But no major changes overall. So you know that our target is to be at around 5% vacancy, and that's where we are at the moment.

And second question, could you indicate what is the split of the like-for-like rent growth? And you mentioned in the report or in the release about rent -- you talked about rent incentives. Could you give -- be a bit more clear on that and also by regions and by segment?

Yes. Regarding the rent increase, you may have seen in the report, there is a moderate increase of around 0.4% in rents like-for-like. What is driving down revenue on the top line have been especially increasing rental incentives. So you know that over the past 6 to 12 months, we have made quite some progress in reducing our vacancy rate. Like 1 year ago, we were around 7%, which we considered as too high.

And therefore, we did some -- had some achievements in attracting quite interesting tenants, but at the cost of some rental incentives, which, as a result, do drive down revenues by around 1.3% in summary. Also something I think, which I want to highlight once again is that what is also driving down revenues is the property tax reform, as just discussed previously, which has nothing to do really with our revenues.

But as it's an apportionment that we have in our revenue, it drives down revenues, although it's good news for our tenants because they have to pay less taxes. So therefore, this a little bit dilutes our revenue figures, which are lower, although we do have slightly increasing rents.

Just to be clear, when you say 130 bps from -- the minus from rent incentives, so what was the contribution to the like-for-like from indexation? I guess it was positive, so I think that was then almost offset from rent incentives.

Yes. As you know, so from incentives, that moves in line with inflation, so you're always starting with kind of plus 2%. What has driven down this like 2% increase that you would expect from an inflation year-on-year is, first of all, that we do still have higher vacancy rates. So we had vacancy rates in between and also that we had some contracts at lower rents. So that is driving down rents in the first 9 months, which, of course, you would like to avoid.

But in the interest of attracting new tenants, that's the decision we have taken. So from kind of the index increases, we have had some negative effects in terms of vacancy and lower rents, which gives you the 0.4% that we show in our report. And we have taken further rental incentives from them, which then brings you to the slightly negative development of the revenue. Hope that makes it a little bit clearer.

And 2 last questions from my side. You mentioned you have prepaid debt or loans on 2 malls. Are these 2 malls, Hameln and Norderstedt? Are these now unencumbered and are likely to stay unencumbered? And the last question is on the guidance range. You have adjusted the range, but not lowered the range. Why not being a bit more precise or, again, coming up with a smaller range given the fact that we are already in the Q4 period?

Yes. So first question regarding the repaid loans, Indeed, that was Herold-Center Norderstedt and Stadt-Galerie Hameln. We fully repaid the loans and the assets are now fully unencumbered, and we don't plan at the moment to take up further loans on these assets. So they will stay unencumbered for the time being.

Regarding adjusting the range, yes, as usual, we have refined the range and have made it more precise. Why don't we make it -- do we have further precision regarding the range? Well, that is more to some effects that come towards the year-end like -- you may remember last year where we have been pretty positively surprised by turnover rents. And as you know, for the retail business, the last quarter, especially around Black Friday and Christmas, that's a very interesting one always for our sector.

And therefore, we keep some more room for this in our guidance and to reflect some potential upside, but also some -- for other reasons to reflect some downside. So yes, more precise range, but maybe not as precise as you -- it was in the past because there are, at least in relative terms, a little bit more turnover rents that may be higher or lower depending on the year-end business.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Hans-Peter Kneip for any closing remarks.

Ladies and gentlemen, thank you for your interest and your questions. As always, feel free to contact the IR team should you have any further inquiries. The entire Deutsche EuroShop team wishes you a happy and peaceful end to the year. We hope to see you soon at future investor or retail events or, even better, in one of our shopping centers. All the best and cheers from Hamburg.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.