Ladies and gentlemen, welcome to the H1 2025/2026 financial results conference call. I am Sandra, the Chorus Call operator. I would like to remind you that all participants have been listen-only mode, and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing Star and One on your telephone. For operator assistance, please press Star and Zero. The conference must not be recorded for publication or broadcast. At this time, it is my pleasure to hand over to Kyrill Turchaninov, CFO. Please go ahead, sir.
Thank you. Hello and welcome everybody to Deutsche Konsum Real Estate AG earnings call, analyst call for the first six months of the financial year 2025, 2026. We will start the presentation on page four, where we have highlights for, well, for the first half of the financial year. We have a year-on-year comparison on the rental income, which decreased as expected, predominantly or mostly due to the asset sales. FFO year-on-year went up by EUR 5 million or so. Of course, there are many moving parts behind FFO. Rental income is down due to sales. The property operating expenses as well. However, the major moving part or the major effect comes from the interest expense, which is about EUR 5 million lower than in the first six months of the prior financial year.
Last time we reported, last time was in February. We had our last earnings call. We reported that the contract for the sale of eight assets was signed in December, and in April this year, it was closed. The cash we received was EUR 10.2 million. However EUR 24.5 million of the total sales proceeds was used to pay down debt, which was secured by those assets. We also mentioned last time, Obotritia did not pay back their loan of EUR 60 million, which was of course on the balance sheet fully provided for and is exclusively accumulated interest. We looked at various options on how to proceed with this, and we have also consulted our legal advisors.
Under the circumstances, we decided that the best possible scenario is to enter into a term sheet, a binding term sheet with Obotritia, which effectively replaces the existing unsecured, non-interest bearing EUR 60 million of receivables with an instrument which is a debt instrument, interest bearing and secured. We are in discussions right now to finalize the contract, but the term sheet with main head of terms was already agreed and signed with Obotritia. The KPIs after debt-to-equity swap are as expected. Last time we said that pro forma loan to value is going to be around 41%. Indeed, after the successful execution of capital increase and the debt-to-equity swap, LTV is 41.1%. Other KPIs were also affected as expected by such debt-to-equity swap.
The average weighted debt costs are higher than in the first quarter of the financial year. Those were 2.92% at that time. The effect is again due to debt-to-equity swap. We do not have the debt which was used for debt-to-equity swap anymore on the balance sheet. It was non-interest bearing in the first quarter of the year. Let us turn to page five, where we have some highlights or some information on the restructuring plan. As we already said on a few occasions, the extraordinary general meeting on the 4th of December approved a capital increase and the debt-to-equity swap, which was formally in effect with the registration on the 13th of February this year.
The new shares in amount of EUR 59.6 million were issued, which also included 166,000 shares for cash contribution, and the entire share capital increased as shown. As expected and communicated, the voting rights of the shareholders that hold more than 5% of the shares are Faberellé with 60.5%, Obotritia or Mr. Rolf Elgeti with 11.8%, and the free float of about 27.7%. Even though the debt-to-equity swap was of course a major part of the restructuring plan, we still have to continue with our sales to stay on plan and obviously to reduce debt. From the beginning of the restructuring, and the beginning of restructuring was the Q2 of the last financial year, so from January to March 2025.
Since then, about EUR 78 million of sales volume was executed. The market remains difficult. There are obviously known geopolitical macroeconomic factors. Both sides, the investor sides and also the financing side, are affected by this developments. We can now turn to our portfolio details, which are on page eight. At the end of the six months, on the 31 of March 2026, we have 148 assets. Three assets closed in the six months. The sale, which I mentioned earlier, of eight assets closed in April, so that was after the balance sheet date. The, the developments on the KPIs to the properties are as expected, with one notable exception, and that is the decrease in annualized rent, as well as the increase in the vacancy rate. Now, there are two major events happened.
One of the large tenants that we have did not renew a lease in one particular property for a substantial amount of square meters. Unfortunately, earlier in the financial year, one tenant declared bankruptcy, and therefore we also have vacancy due to that, as well as the reduced annualized rent. There are some offsetting leases. In the six months, we've signed a total of 15 commercial leases, which excludes the small leases for the, well, very small, actually, some apartments. However, those are and are not enough to offset the loss due to the said vacancy. We can now turn to page 10, where we show our tenant structure, which did not show significant changes or developments other than those expected from the asset sales. One of the major items here is the CPI-linked rents.
We are still into 84%, so a substantial part of our commercial leases are linked to CPI, which especially is valuable and provides obviously stability in the current inflationary environment. We also have details on page 13 on our financing. We show here maturity profile, and as last time or in last presentations, a bulk of this happens in 2027. That is certainly due to our restructuring and various agreements which we have entered with the creditors. The maturities are in September 2027, and until then, there are no maturities. The small amount of about EUR 100,000 shown for 2026 is not actually a maturity due. It is a repayment of some loans, minor loans with normal amortization, but for completeness purposes, it is shown. In terms of the financial KPIs, that's where we now, in the balance sheet and the P&L obviously, see the effect of a debt-to-equity swap.
The reduction of total financial debt by about EUR 132 million is certainly predominantly driven by EUR 119 million or about EUR 119 million of the debt-to-equity swap. Obviously, there have been other normal amortizations as well as amortization due to asset sales. The total cost of debt, as I mentioned, on the first slide or actually on page four, is up, but that is because of the effect from those financial instruments, which were non-interest bearing in Q1 and now are converted into equity. Overall, the effect of the debt-to-equity swap and the asset sales, the restructuring plan as expected. There are challenges in executing the restructuring plan on the sales side due to many factors. However, we are on track and are optimistic. With that, we will be concluding the presentation part, and we'll open the call for questions. Operator?
We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only hands while asking a question. Anyone who has a question may press star and one at this time. Once again, to ask a question, please press star followed by one. Sir, it seems that there are no questions. Back over to you for any closing remarks.
Well, maybe we just, you know, give a few seconds more for people to have a chance to ask questions.
Yeah, sure.
Right. Well, I suppose there are no questions at this time. Thank you very much, everybody, for listening to our call, and then until next time. Operator, we can now close the call.
Thank you, sir. 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.