Good morning, and thank you all for joining us today. My name is Gundolf Moritz, and I'm heading Financial Communications for Adler Group. With me are Thierry Beaudemoulin, CEO, and Thomas Echelmeyer, CFO, who will guide you through today's presentation. At the end of the presentation, we have reserved time for a Q&A session to answer any questions you may have. Please note that this call will be recorded and made available on the company's website after the call. I would now like to hand over to Thierry. Thierry, please go ahead.
Thank you, Gundolf. First of all, I would like to thank everybody for joining us here today. I would like to start today's presentation with a brief update on our strategy, as well as an update on the considerable progress achieved within any of our five strategic pillars. Before I do so, please allow me to put our accelerated progress in context. Over the past months, the German real estate market continued to be more adverse than expected. Transaction volume and price were impacted by prediction about a deeper than anticipated recession, two additional rate hike, and a continued restrained sentiment among market participants. Against this background, I'm convinced it's fair to say that we perform remarkably.
We are very proud that we have successfully closed the sale of the 700-unit Berlin-based Wasserstadt rental portfolio, close to book value, which is a highly recognizable achievement of the team involved. In addition to that, we have disposed the development project, Station Forum Pankow, located in Berlin, and the development Mannheim No.1 , of course, the city of Mannheim. The just mentioned three projects contributed to gross proceeds of around EUR 530 million year to date, representing a significant portion of the total transaction market volume in Germany of around EUR 5 billion so far. The sale of Wasserstadt and the two development projects show our capability to continue disposing assets and generating liquidity despite adverse market conditions. We will further progress, however, at a lower pace than originally expected, due to the adverse market conditions.
Further, we are continuing our transition to concentrate our portfolio to Berlin with limited development exposure. To do so, we are reoffering our NRW portfolio to the market and will continue to execute orderly disposal of our selected portfolio and development project in the short and medium term. To accelerate the process, we have mandated market-leading broker for all our major development project. We have largely finished all committed CapEx on development project. Other sizable CapEx commitment have been put on hold, in line with what we have previously communicated. Obviously, it goes without saying, we will continue maintenance and relating CapEx where necessary in order to keep our assets in marketable condition. We successfully addressed all our financial obligations during 2023, secure new financing in a very challenging financial market environment, and ensure sufficient liquidity for the group.
As announced at execution, we have successfully placed EUR 191 million senior secured notes to refinance the EUR 165 million convertible bond and EUR 24.5 million of promissory note, both at Adler Group, which were due in November 2023. With that, and the repayment of Benrather Gärten promissory note in the amount of EUR 50.5 million, we have no remaining maturity in 2023. Following the completion of the disposal mentioned, we have repaid circa EUR 270 million of associated secured debt year to date. The squeeze-out process and delisting of ADLER Real Estate AG has been completed in October, in line with the announced simplification of our corporate structure. As a consequence, we have also discontinued our external reporting.
As mentioned, during the last year, 2023 result presentation, the sales process of our stake in BCP has been initiated and is currently ongoing. Concerning Consus, we would like to mention that we fulfill our legal obligation with concluding the ordinary AGM for full year 2021. We are delighted that yesterday, the general meeting of shareholders has appointed AVEGA Revision as auditor of the standalone and consolidated financial statement for the year 2022 and 2023 for Adler Group S.A. The long-lasting search for an auditor has first ended. As we stated earlier, the audit will be in the form of component audit, with three other firms auditing the various subarea of the group. Among these firm, Rödl & Partner , has commented their work as auditor of Adler Real Estate in July 2023.
With the appointment of this respected audit firm, we are well positioned to be able to publish group audited financial statement for 2022 and 2023 until September 2024 as planned. We will keep you up to date on any relevant development. Let's move on page 6. For this, I hand over to Thomas.
Thank you, Thierry. Also from my side, a very warm welcome to everyone here on the call. In addition to the progress made on our five strategic pillars, we also completed the financial restructuring plan. Please allow me to refresh and update you on recent events in this respect. In April, the High Court of Justice of England and Wales sanctioned the restructuring plan, and the amendment of the terms and conditions of our notes were implemented and continue to apply.
The new money funding has been fully drawn in three tranches for a total amount of EUR 937 million, to repay the EUR 500 million ADLER Real Estate 2023 bond, to tender the EUR 300 million ADLER Real Estate 2024 bond, and to provide additional liquidity of EUR 80 million for Consus, and the remainder to be used for the payment of the restructuring fees of circa EUR 57 million. On the back of the permission for to the appeal from the Court of Appeal, three days of hearing took place between 23 and 25 of October. It is expected that a decision from the court will be communicated soon, and we will update you on the resulting expenses accordingly.
Finally, as already mentioned, the AGM has appointed AVEGA Revision as auditor to the standalone and consolidated financial statements for the years 2022 and 2023. Now, moving on to the Q3 2023 highlights on slide 8. Back to you.
Thanks, Thomas. Our residential portfolio continued to show strong operational performance in the third quarter, 2023, supported by solid underlying rental fundamentals. The like-for-like rental growth in the first nine months has been +2.4% year-over-year. Average rents stood at 7.39 EUR per sq m per month at the end of September, which represent an increase of 0.50 EUR or 2.1% year-over-year when adjusting last figures for Wasserstadt Mitte. Vacancy remain at low levels, standing at 1.6% at the end of Q3, reflecting the high quality of our asset and our strong Berlin home base. On valuation, due to the absence of a portfolio appraisal in Q3, the fair value of our portfolio has not changed compared to the half-year figure.
Our appraisers are currently progressing with the full year 2023 valuation, on which we will inform you with the publication of the full year 2023 figures. Moving to our financial performance, on the back of the decreased size of the yielding portfolio, the disposal of the remaining part of the eastern portfolio to Velero KKR, and the Waypoint Portfolio, the Leipzig portfolio sell at BCP level at the end of 2022, and the sale of the Wasserstadt portfolio in the first quarter of 2023. Net rental income came in at EUR 160 million, compared to EUR 187 million in the first nine months of 2022. As at the same time, interest expenses rose with the restructuring effort. FFO from rental activity was negative for the first time, with -EUR 7 million, compared to EUR 68 million in the same period of 2022.
This corresponds to FFO of -EUR 0.05 per share versus EUR 0.58 in 2022. On the NI guidance, we confirm our previously communicated range for the full year of 2023. We expect that the shortfall from the sale of Wasserstadt Mitte will be offset by corresponding rental growth in the remaining portfolio in Q4. EPS stood at EUR 1.1 billion, or EUR 7.27 per share, at the end of the third quarter of 2023, compared to EUR 1.3 billion, or EUR 8.76 per share, at the half-year stage. A movement that was mainly driven by the higher non-cash interest expenses resulting from the new money funding. Compared to Q2 2023, APR activity increased by 1.4 percentage points to 89.1%.
Weighted average cost of the debt was 5.7 at the end of September, 0.2 percentage point more than at the half-year stage. Obviously, this is driven by the costs incurred by the new money funding that has been drawn on 26th April this year, and a number of refinancing at the property level. We had EUR 432 million cash in our balance sheet at the end of the third quarter, excluding cash held at BCP. This is more than EUR 200 million more than one quarter ago, resulting mainly from the proceeds from the disposal in Q4. With this liquidity position, we will be able to continue our operating activity, as well as servicing our debt obligation.
In that regard, and as said earlier, we are proud that we were able to dispose of 700-unit Berlin-based yielding portfolio of Wasserstadt, close to book value, during the third quarter. In total, and including Station Forum Pankow, the volume of disposed GAV contribute to roughly EUR 530 million year to date. The sales of these three projects respectively resulted in net proceeds totaling circa EUR 200 million after repayment of circa EUR 236 million of associated debt. Since the beginning of the year, we have repaid debt associated with sales in total of around EUR 270 million.
Despite the sale of two development projects, it is fair to say that against the backdrop of a substantially more difficult market environment, progress on the disposal of development project is not as fast as we would have liked it to be. Further worth to mention is our progress we made in the completion of development project for forward sale and condo, and the realization of respective milestone payment. Regardless of the adverse market condition, we will continue our effort to reduce our development exposure further. In particular, we expect to close the Offenbach project in the first half of 2024. In addition to our effort to dispose development project, we are also working on the sale of different yielding portfolio.
Our NRW portfolio, more commonly referred to as Cosmopolitan portfolio, has been recently reoffered to the market, and the sale of our stake in BCP is currently ongoing. Please join me on page 10 to update you on our operational performance. Following the disposal of 700 units of the Wasserstadt portfolio, we have currently more than 25,000 rental units in our portfolio. 80,000 of those are located in Berlin, the German capital. As you can see from the slide, the value of our portfolio has decreased with valuation and disposal from EUR 5.2 billion at the beginning of the year to EUR 4.4 billion at the end of September, which translates into an average fair value of EUR 2,597 per sq m.
90% of our GAV of our portfolio, EUR 3.8 billion in absolute figures, relate to our asset in Berlin. Let's move on to the next page. In the course of the first final nine months, the like-for-like fair value decreased by 8.4%, which was mainly driven by our midyear revaluation in June 2023, and has been adjusted for the sale of the Wasserstadt portfolio. As mentioned before, the value of our low-yielding Berlin portfolio has been impacted most by the new interest rate environment in which we find ourselves. This results in an 8.9% negative revaluation compared to -5.2% revaluation for the remainder of our portfolio. For Q4, we anticipate this direction of travel to continue, albeit at a slower pace, and foresee a valuation decline in the magnitude of a low- to mid-single-digit percentage number.
Following the 8.4% decrease in fair value and 2.4% increase in rent year to date, fair with mechanically increasing yield. Regardless, the historical discrepancy between Berlin and the rest of Germany continue to persist as we observe significantly lower yield in our capital. 0.3 percentage point increase to 3.1% at the end of the first quarter for our Berlin-based portfolio, compared to 2.8% at the end of last year. And in addition to that, rental yield for the remainder of, of the portfolio has increased by 0.3 percentage point, as well as 5.2% versus 4.9% as per full year 2022. Please join me on page 12 to discuss our rental growth in more detail.
At the end of the third quarter, we have realized a total like-for-like rental growth of 2.4% compared to 2% a year ago. There are a number of factors impacting our rental growth. 8.1% decline originates from new vacancy. This concerns units that were rented a year ago, but that are currently vacant. 1.2% increase relates to vacancy reduction from last year, of which 1.5% stems from units where CapEx were exerted upon them. 0.2% rental growth comes from re-letting at market rent without any effect of CapEx investment. And finally, 1.8% is attributable to the inflation of existing contracts.
All in all, if we exclude the effect of new vacancy, we could say that rental growth would have been 4.2%, which would be in line with what peers have shown to date. Regardless, disposals have also an effect. Our average rent was 7.39 EUR per square meter per month at the end of Q3, 2.2% lower compared to the real figure of 7.56 EUR a year ago. If we adjust this for the Wasserstadt portfolio in order to get an MBS comparison, average rent would have been 7.24 EUR one year ago. First, we note an increase of 0.15 EUR, or 2.1%. Let's continue on page 13, where we take a look at anticipated rent increase for Q4.
For the last quarter of 2023, we anticipate a total rent increase of approximately 2.9% based on rent increases that have only been announced to our tenants. This should lead to an implied total rental growth of 4.7%-5% for the full year 2023. The rental growth for Q4 can be split in two, plus 3.1% for our Berlin portfolio and 2.3% for other portfolio in Germany. This rental growth estimation translates into a total estimated annual rental income in the amount of EUR 133 million at the end of the year, of which EUR 101 million would accrue to Adler Group and EUR 52 million to Adler Real Estate AG. All in all, this underpins the high quality of rental growth potential of our portfolio.
I would like to hand over to Thomas, who will update you on our financial performance on page 15.
At the end of the third quarter of 2023, we had a portfolio of yielding assets worth approximately EUR 4.4 billion and development projects with a GAV of approximately EUR 1.6 billion, coming to a total GAV of EUR 6 billion. This does not include the portfolio of BCP, which is considered under assets and liabilities held for sale, as we intend and anticipate the sale of the 63% stake in BCP, held by our subsidiary Adler Real Estate. In the absence of portfolio appraisal, GAV has been impacted in Q3 by disposals only. The sale of the Berlin-based portfolio, the disposal of Station Forum Pankow, and development project Mannheim Number One, which is closed in October 2023. The disposals also had an effect on the EPRA LTV, which you will see on the next page.
The EPRA LTV of the group increased to 89.1%, compared to 87.8% at the end of last quarter. It is mostly explained by, first, the increased interest expenses, both paid and accrued over Q3 2023 following the restructuring plan. Second, development CapEx, mostly related to forward sales and condominium projects, which cannot be activated. And third, the disposals of the portfolio and development project Station Forum Pankow increased the EPRA LTV, given the impact of the deconsolidation of both minority interests and associated debt. Positive impact on LTV was related to, first, the refinancing activities at BCP and the redemption of a debt blocker following the disposal of the Leipzig portfolio and other miscellaneous items. Please allow me to remind you that the EPRA LTV deviates from the covenant LTV definition in our bonds.
This covenant is temporarily listed and will be tested for the first time on the thirty-first of December, 2024. With this, let's move to page 17. Following the repayment of Adler Group's convertible, the promissory notes and the loan on Benrather Gärten, all 2023 maturities have been addressed. In addition, we secured new financing in a very challenging market environment and ensured sufficient liquidity for the group. More specifically on the repayments. On the twenty-ninth of September, 2023, Adler Group had placed EUR 191 million of new payment-in-kind, senior secured 1.5 lien notes, in order to refinance the existing EUR 165 million convertible bonds and the promissory note, which both were set to mature in November. The new note include payment-in-kind interest of 21% annually, which clearly is an elevated level.
These levels are not those which we expect to see in the 2024 refinancing of secured bank loans, as we have constructive dialogues with banks to achieve more realistic rates on a first lien basis. Please note that due to the settlement of the transaction in October, you won't see the accounting effects of the new financing in the Q3 accounts. On August 9, 2023, BCP completed an exchange offer for its bonds, in which the company repaid EUR 97.1 billion of par value of bonds in exchange for EUR 53.2 million of par value of bonds and EUR 53.4 million in cash. The difference between the par value repaid and the actual cost incurred can be easily explained. In addition to some transaction costs, the main portion is due to the FX losses.
As the Euro Israeli and shekel exchange rate increased between the moment of entering into the hedging contract and the actual day of the exchange offer, a loss occurred. Besides the repayment of the Adler Group convertible bond and the promissory notes in November, we have also repaid maturities linked to the disposal of the portfolio and Station Forum Pankow in the total amount of EUR 236 million, and Benrather Gärten in the amount of EUR 50.5 million, which is at a discount of 7.9% to par value. Let's continue on page 18 to talk about the debt KPI. During the third quarter, our gross debt position decreased with nearly EUR 300 million to roughly EUR 6.5 billion.
The lower gross debt position mainly results from the repayment of debt related to the disposal of portfolio and Station Forum Pankow in the amount of EUR 236 million. As a result of the improved restructuring plan, we have a fully secured financing structure, of which 29% relates to secured bank debt, with the remaining primarily related to the restructuring. You can find more details on the different security layers on the right-hand side of this slide. When it comes to the cost of debt, the weighted average cost of debt has slightly increased to 5.7%, compared to 5.5% as per Q2 2023. Our total debt position has been fixed and hedged with an average maturity of 2.9 years. The detailed maturity schedule is shown on the next page.
Until November 2023, we have successfully refinanced the Adler Group convertible bonds and promissory notes with EUR 191 million new payment-in-kind, secured by 1.5 lien notes, and repaid in the amount of EUR 50.5 million, with 8% discount below par. With these repayments, we have covered all maturities for 2023. Looking at the 2024 maturities, the majority of the maturities consist of bank debt and are either to be prolonged or covered through capital recycling measures, including additional disposals. In short, we do not expect any major challenges in 2024 as far as refinancing is concerned. Let's turn to cash. Next page.
We have a cash position of EUR 432 million at the end of Q3 2023, which is higher than the EUR 231 million we had at the end of Q2, due to the proceeds from the sale of the Wasserstadt portfolio and development project Station Four, Frankfurt. Please let me remind you that the EUR 432 million excludes EUR 61 million of cash held at BCP level, which is classified as asset held for sale at group level. With that, we would get to a position of EUR 493 million cash at hand per 30 September 2023. There have been several factors affecting the cash position during the third quarter of 2023.
Total cash inflow from the sale of yielding assets of EUR 344 million, mainly related to the sale of Wasserstadt portfolio. In addition to that, we had also a positive inflow of approx EUR 30 million, resulting from the sale of Station Forum, Frankfurt project. A positive cash flow results from attracting additional bank debt, which is part of the VBR melee refinancing in an amount of EUR 56 million. BCP has repaid half the share of the loan in an amount of EUR 75 million, with an additional EUR 10 million from the participation in the sale of BCP's Leipzig portfolio. With the asset sales, we have also repaid EUR 236 million associated secured debt during Q3. The remainder of the total debt repayments of EUR 19 million relates to, among others, amortizations.
And finally, we spent EUR 39 million in CapEx, which relates to the ongoing development projects at the Consus level. The remaining net cash outflow of EUR 39 million mainly relates to restructuring and other advisory fees, taxes, and smaller items to look under half. Thierry, now back to you.
Thanks, Thomas. We would like to end this presentation with some concluded remark and recap that we think were the most important milestone. Above all, we successfully addressed all of our 2023 refinancing requirements and accumulated a cash position of EUR 432 million to continue with our plan in 2024. In further detail, AVEGA Revision has been appointed by the General Meeting of the shareholder as auditor of the standalone and consolidated financial statement for the year twenty-two and twenty-three, which leave us well positioned to be able to publish audited financial statements for the whole group within the announced time frame. The squeeze out process and delisting of Adler Real Estate was completed. External reporting was discontinued accordingly.
Despite adverse market conditions, we have successfully disposed the Wasserstadt portfolio at book value and two development projects at the expected price. With the disposal, we were in the position to reduce our total interest-bearing debt by nearly EUR 300 million and improve our liquidity position to EUR 432 million. Operational KPI have further improved in Q3, and we can confirm our NRA guidance for the full year 2023. With that, we would like to conclude the presentation and open the floor for any question you may have. Thank you for your attention. Rudolf, over to you for the Q&A.
Yeah. Thank you, Thierry. And, yeah, please, Sandra, you can open the line for Q&A, please.
Ladies and gentlemen, at this time, we will begin the question and answer session. The first question comes from Felix Wolfgang from Sarria. Please go ahead.
Yes, hello. Thank you for the results presentation today. It seems to look like they are possibly becoming a bit more stable. Can I ask, when you sell assets, when you sell, say, an electric portfolio or, say, any other assets, and the headline figure that you communicate is somewhere near par? In general, how large is the component in such a transaction that isn't exchanged in cash or otherwise, say, taking over debt on day one? There tends to be a sort of uncertain proportion that is subject to a variety of conditions, subsequent and future performance. Are we talking 10, 15% there, or what should I assume?
Thank you, Rudolf, for the question. So I will answer in principle. So for the yielding asset, there's no post-closing condition, so 100% of the price is paid. For the debt, it depend on the position of the lender, the duration of the financing, but of course, most of the financing that are maturing at a lower cost. So for instance, investor start meter, we have transferred the financing, which was attractive, which are the lowest, to sell at book value. Although smaller transaction of yielding asset, we have not been able to transfer the financing and then the sales price achieve were slightly different.
In regard to development, there are more likely some milestone to be done post-closing, but we are trying to limit that as much as possible. So for instance, in Mannheim Number One, which has been disposed, we have 5% remaining to be paid, based on additional success of letting, which we have negotiate a further timing post-closing to do it. But in principle, we try to close and be paid immediately. Thank you.
Okay. So if I understood most of such transactions these days in Germany to include a certain contingent amount, be it that maybe the cash travels first, but has to be repaid later, or more likely, doesn't travel first. And there is a sort of component of the transaction there that will be paid later. That is not, If you take a yielding transaction, like the Waypoint portfolio, for instance, that is not part of such a transaction?
So, no, just to clarify. So when we announce closing, we announce the cash to be in. When it's yielding asset, 100% is paid at closing. It's very unlikely that we have post-closing element. On development, in specific case, for instance, like Mannheim Number One, we may have further payment, but then this is a very small portion of the total price. Because our policy, when we announce the closing, we communicate on the cash, which is almost 100% of the purchase price. So we— So this is what we are doing. Of course, we are still from the past, some forward sale, which are development, which have been sold, upon completion, for instance, in Mannheim, in Dresden, where we have this kind of payment by check.
But this is coming from the past, and this is not what we are doing for the current sale we have announced. So out of the EUR 530 million we have announced, except number one, where a few percentage are still open, 100% have been cashed out at closing. Thank you.
Okay. That's very good. I have only two more questions. One is on the ESG CapEx. ESG tends to drive CapEx quite a bit these days, and I was wondering if you, going forward, saw any increased CapEx requirements, either in your NRW portfolio or in Berlin, and or what those requirements would be to achieve the growth that you're looking at? And yeah, that's question number one. And if I'm not sure I've entirely understood your refinancing at BCP level, if you could perhaps just tell me one more time the ins and outs during the quarter. Thank you.
On ESG, we have an ongoing plan with our current CapEx measure, which amount in full year basis between 15 and 20 EUR per square meters. Part of our ESG transition is including in the budget. But of course, as some measure of ESG are taken a bit more time, we have also to assess timing on sales. For instance, when a portfolio is for sale, we are doing short-term ESG measure, which can be completed before the end of the year. And then for more long-term measure, this is something we are discussing with the buyer to present what is forecasted for the coming years, and we will do that. But let's say it's a 15- to 20-year plan, so there's no immediate impact.
But of course, all our CapEx activity is flagged toward energy efficiency and toward improving the ESG rating of our asset. So Thomas will answer on BCP.
Yeah. On the BCP, what you are asking, Wolfgang, BCP, we paid EUR 97 million of bonds of par value, and in exchange for they paid in cash EUR 53.4 million, and for EUR 53.2 million of par bonds have been exchanged. So the difference between these two numbers relates to the exchange rate losses.
Okay. Well, thank you.
Yeah. Yeah. There are some prolongation costs, obviously, and the exchange rate also between euro and Israeli shekel.
Okay. Thank you. Good luck.
Thank you. Thank you, Wolfgang.
The next question comes from Emmanuel Arnaud from Barclays. Please go ahead.
Hi, it's Emmanuel Arnaud from Barclays. Three questions, but very quick. Offenbach, long closing, what's the main driver of the fact that a long closing is required into H1 2024? And the second question is: Could you give us an idea of how much you're paying for new bank financing in terms of overall cost of financing, and for how long? And third, you mentioned sales ongoing for the BCP stake. I guess it's the marketing process that is ongoing, or do you already have customers? Talks around it in concrete, and is it a structured transaction as we are seeing in real estate, or is it just the sale of the stake? Thank you very much. Sorry if it's too many questions.
So on Offenbach, let's say in general, in development project, which have already been start and where you have different parts with residential, commercial, the buyer need to team up with one or two developer, one for residential, one for commercial, and then to align the investor. They need also to align with the city, which has to confirm the transfer of the building permit. So all these elements in the context where we are today, with uncertainty about the future evolution of the price for new build housing and also for interest rate, is taking more time. So that's what we are seeing.
So we are still working, and we expect to close in the first half of the year once, let's say, buyer would have completed the different step they are. In regard to BCP, yes, we are in marketing stage. We have NDA signed, and we have potential interested parties looking to the data room. So we are selling a stake of our 63%, but of course, in the environment of the market where we are today, buyer are also looking the underlying portfolio of the company, and taking time to assess the opportunity for them.
Yeah, and then, you, Matt, on your second question, which you have the idea on new bank financing, you see, in our presentation on page 35, where the maturities are in June 2024, December 2024. We are in discussions, obviously, with our banks, and clearly the interest environment has changed in the last year, as we all know. So that means we expect, of course, higher interest costs than we had before, but currently, I cannot say what the amount will be exactly. But we can estimate if we have a 4% or more, and then you put in the margin on top, so we end up in 5%-6%, I would assume, from today's point of view.
From the maturity, what we are looking for is at least a two years prolongation, but this has to be adjusted again with respect to our sales plans.
Thank you very much.
Thank you, Mario.
Gentlemen, so far, there are no more questions.
Well, thank you to have joined us today for our quarterly presentation, and we look forward to see you at the end of the first quarter to update you on the full year results. Thank you, and have a good—I wish you all a good day.