Good morning, everyone. This is Christian and Alex, CFO and CIO of Deutsche Konsum REIT-AG. Thanks for your time and interest in Deutsche Konsum's Nine month figures this morning. We have this morning uploaded our presentation to the website. For those who cannot join this webcast, where we flip through the pages of the presentation, please go to our website, open it, and we are also referring to page numbers so that you can follow us. As per usual, we just give a quick overview about what happened in the nine months. We'll highlight the key issues, and we'll then have time to answer your questions in the Q&A session.
I will start with page number four, which is the summary of what happened in the nine months of the current financial year, 2022, 2023. I would start with the operative business, which was again, very strong. As you have seen, the rental income has went up by 6% year-on-year to EUR 58.7 million. This was mainly due to a larger property portfolio compared to the prior year because of the acquisitions we did in the second half of the prior financial year, but also because of rent increases we did last year and also this year. I will come to that a little bit later. However, the FFO is down by roughly 15% to EUR 27 million or EUR 0.77 per share.
This is because of high interest costs, obviously, which we have now taken due to refinancings we did lately. The AFFO per share also down by 38% to EUR 0.36 per share. This is because we also had extensive CapEx measures this year of around EUR 40 million to various properties in order to enhance the quality of the properties, to reduce vacancy and so on. Alex will explain about that a little bit later. Regarding the rent increases I mentioned, we were able to increase rents by 3.7% per annum just because of the CPI linkages we have. You know, around 85% of our rents are CPI linked, and that also helped.
Like-for-like rental growth was in total at 3.7%, which is more than EUR 2 million every year, annualized rent. This is why the annualized rent of the property portfolio we have in place has increased to almost EUR 79 million. Regarding acquisitions and sales we had in the nine months, we have sold properties for almost EUR 10 million, which the biggest one of that was a DIY store in Chemnitz, what we have sold in last December for a very attractive yield of 5.7%. Also, we have sold two vacant properties from the Bavaria portfolio we have for an amount of EUR 2.4 million, which is slightly above the book value. This was a kind of portfolio cleanup measure.
We also have, in June, notarized the sale of our vacant ex-Real hypermarket in Trier, which was vacant for more than a year now. We expect the transfer of title in the course of next year because some of the conditions of the purchase contract have to be fulfilled against that, e.g., building permit for the acquirer and so on. Maybe Alex will tell a few words about that as well. On the acquisition side, we were very modest this year. Last acquisition we did was at the beginning of this financial year, an acquisition of a small property in Zurich, which came at a very attractive yield.
Since then, you know, the market was kind of frozen, nothing happened, and there was just a too high spread between bid and asking prices. We, we see the gradual closing of this gap, but not until now. We were disciplined here, haven't acquired, and we guess that this will change soon after the summer break, when maybe some sellers might have more pressure to sell their properties until the end of the year. That's why we think that this could have also good opportunities for us to grow further on. Regarding the balance sheet, I think here everything is very stable and solid. ICR, interest cover ratio, is 3.1 x the EBITDA, which is very comfortable.
LTV went down to 51.2%, slightly down compared to the prior quarter. It's in line with our LTV target of around 50%. Here's everything fine, I guess. The EPRA NTA per share, which is the NAV on a share basis, on a fully diluted share basis, that means as if our two outstanding convertibles would have converted, has risen to EUR 11.37, which is embarrassingly high compared to the low share price we see at the moment.
One note I would like to make is that we have not done our valuation like in the prior years at the end of June, because we did it last year and then had to make another valuation at the end of September because of the interest hikes we have seen in the meantime. That's why we have decided, because of the volatility of the markets and so on, that we from now would make our valuation at the end of September. That's why we don't have any valuation results here in our P&L. A little distortion of the P&L, but this will come then in September. Regarding the debt, the average weighted debt costs, including unsecured and secured debt, has increased to 2.8%.
This is around 20 basis points above the prior quarter, and this because of the refinancings we did. Until now, we have refinanced around EUR 62 million of short-term debt, which we have paid down or refinanced with other debt. This was 62 out of 83. That means until the end of the year, we have to refinance two more loans of total EUR 21 million. I don't see any hindrances or problems here. I think that will happen without any problems. In this nine months, we have refinanced the older loans with new loans we have taken of EUR 67 million, which came in, in an average interest of 4.2%.
Here you can see that there's a gap of the interest cost between the old loans we have paid back, which were below 2%, and now we need to take new loans at the level of more than 4%. That's, that's the main reason why the FFO has, has dropped. Regarding the tax dispute we have with the Brandenburg Tax Office, as we have announced on July 7th, the Financial Court, Brandenburg has decided to follow the argumentation of of the tax office more or less, and has denied our request to suspend the tax payments, which we have requested until the main topic is judged by a court. This was very disappointing and yeah, it doesn't help it.
We have to pay taxes for 2016 until 2023 now. We partially have already paid the taxes, but we'll, we'll make in the next weeks out of the cash we have. In the meantime, we are in total discussions with, with our lawyers and internally in, in the, in the management board and supervisory board how to go on with that. Maybe we will have the chance to, to get to a, a higher court, where we hopefully get a more objective view on what was happened there. We, we try to, to get to the Federal Court, Financial Court in Germany, and we will let you know what next steps will happen on this, on this.
Finally, regarding the FFO guidance, we confirm our range of EUR 36 million to 39 million . Yeah. Now I would like to hand over to Alex, who gives an overview about the portfolio on page seven
Yes, exactly. Thank you. Jumping to page seven, I would like to highlight a little bit on the current portfolio development. As Christian just mentioned, we have not done any, any acquisitions in recent months, which is due to a strategic decision under current market conditions. We see that, that currently, property owners are rather reluctant to, to, to sell. The sellers who are actively selling right now, especially for the assets we are targeting and, and, and which are in, or in line with our strategy, those, those sellers tend to have some sort of, of pressure to do that, to, to sell their assets. Yeah, we see and we believe that this pressure will rise in the second half of this year.
We see actually more interesting investment opportunities for us, which are hitting the market. Thus, our pipeline is actually filling quite, quite well, and we are actually letting time play for ourselves. And we are looking for a very interesting second half of the year. On the other hand, as Christian also mentioned, we have sold a couple of assets, one in Chemnitz and two in Bavaria, which is actually the most interesting one is the one in Trier, which we notarized in June. There, actually, we had due to very strong interests from tenants as well as potential buyers. So potential tenants and potential buyers were both very interested in this asset.
We were faced with a, with a decision, either to redevelop the asset ourselves or to sell the asset, and we decided for the latter. As from our point of view in the current market, we thought that this is the more efficient scenario for us. We found a quite a strong party who was very interested in the asset to redevelop it for itself or for themselves. Thus, with them together, we will plan the next steps to fulfill this contract.
Looking at the portfolio development, there haven't been a lot of changes, but one very specific change is actually the vacancy, which went down to 10.5%, which is due mainly to the sell or the sale of the asset in Trier, which was totally vacant and which is quite large. This had a quite, quite significant impact on the portfolio. Another, another development which is at least as positive, is again, the development of the WAULT, which stayed stable. We always like to highlight that while as time goes by, the duration of all the contracts in our portfolio and every contract in general, the duration goes down.
However, with our active portfolio management, we can keep the WAULT stable. This is, this is remarkable actually, because while all of the contracts of the portfolio are, are decreasing or the, the duration is decreasing, only, only yeah, only, only a couple of contracts actually are, are to be negotiated and to be extended within, within a quarter. With these durations, we are able to, to maintain the, the duration on a, on a, on a stable level. This is, this is always something we like to highlight and, and which is very, very important for, for our strategy. Mentioning the active asset development, I actually want to jump to page,
This brings me to page to pages 12 and 13, where we have highlighted some of the major redevelopments in the recent quarters. There we have done for these assets that you can see here, which is a selection of properties. We have fulfilled major redevelopments in recent quarters, which actually all have been done in running operations. The tenants, and especially the major, the main tenants, the grocery stores, they could keep up their operations while the assets were extended, spaces were reorganized, and especially also technical installations were modernized.
This is quite significant because all of the rents were paid full, and the locations as such, could keep on running, which is always very important for the customers as well. These modernizations have been done after long negotiations, always with the individual tenants, and also in close reconciliation with the tenants, which resulted always in lease extensions, rent increases, also the stabilization of the individual assets, because we also now have the potential to rent out further spaces. Which is also very important for our strategy, is that with this redevelopments, we can have a manifestation of the individual location as a retail location.
This stabilizes our assets in our portfolio for, in a long term, on a long-term perspective. As, as on a portfolio level, there hasn't been any, any further changes. That's actually already the conclusion of the current development. As I said, we are very looking forward for an interesting second half of the year up to the end of the year.
Christian again. Maybe I would like to highlight page 14, which is a kind of, you know that already, those who are familiar with us, we, we always stress that there's a kind of sensitivity analysis how the portfolio is evaluated referred to the, the current share price.
You can see at current share price levels, valuation of the property portfolio is around 9.5% yield or 10.5 x the annual rent. Everybody can, can decide by himself whether this is sensible or not. I will jump to page 16 quickly, which gives an overview about our financing structure. I don't want to bore you with a, with a table here on the, on the top left side. I have mentioned the key figures here. Maybe going to the expiry profile, which has changed on the left bottom side. You can see here that in 2023, we only have to refinance about EUR 20 million. We are here in conversations with the banks, and we are very confident that we will
refinance this very shortly. When you look at the bar 2024, here we have to refinance the senior secured bond of now EUR 36 million. Here we are already in refinancings. We will swap those funds to to our our standard debt lenders, which are savings and loans and also cooperative banks and so on. Here we are in good discussions and are confident that we will solve this. We are also in discussions with the bondholders of the corporate unsecured bond of EUR 70 million, which also expires in 2024. Maybe here the solution could be a mix of paying down a chunk of the EUR 70 million and prolonging the rest. That's an idea we have to discuss with bondholders.
On the, on the right-hand side, at, at the top, you see the current debt allocation or the, the, the debt sources we are working with. Here you can see the, the, the light blue box, which are the cooperative banks, and also the, the red box, which are the Sparkassen, the savings and loans. Here, of course, this is not just one bank each, these are multiple banks we are working with under the same group name. We have very good connections to them and, and very good standing here. Yeah, this is very solid, stable, and so on. I think that's it from, from our side. We would like to stop here, and I'm happy to take your questions now.
The first question comes from Kai Klose from Berenberg. Please go ahead.
Yes, good morning, gentlemen. Thanks for the presentation. I have a couple of questions for me. The first one, just to clarify, and because you were talking about transactions and the lack of potential investment opportunities, do you see yourself as a buyer looking ahead, or more as a willing seller in the context of having more than EUR 100 million of debt expiries annually in 2024, 2025, 2026, where the financing costs will go up and your net profit and cash earnings will somewhat evaporate given the higher financing costs? Just to clarify where on which side of the table you see yourself, as a buyer or as a seller?
Yes, let me answer that. Of course, we are, we are scanning through, through the, the markets. We see interesting properties coming in at very attractive conditions, which we haven't seen before. We, as before, will evaluate every single property, whether this is value-enhancing or not. Then we will decide, given also, the opportunities we have on the funding side. You're right, we have to, to balance this very well, we want to take the opportunities which will hopefully come, and if we, if we can invest, then we will.
But how do you want to invest in the context of having upcoming debt expiries? Or to put the other question the other way around, how many properties have you put up for sale and have not been able to execute because your asking price is way too high?
You know, we, we, we are not an active seller, but, but we are approached by, by potential buyers, to, to, or who ask for, for the properties, to, to, to buy them at very attractive conditions as well. If we have the chance to, to buy properties for, for a high multiple as we did before, then we will do. This also, broadens our possibilities to, to buy new properties, of course. On the other hand, as, as I mentioned, we are in discussions with the bondholders, and, this, of course, will, will impact the power we have at the end for, for further acquisitions. It depends, it depends on, on the negotiations and the outcome we will have here.
How many properties has Deutsche Konsum put up for sale and has not been able to sell yet?
We haven't put up any, any assets for sale, actually, so we are not actively selling. That's, that's the point I made before, that sellers right now are, are facing a lot of pressure. However, the interesting thing is that, that we were approached regarding individual assets. So we have actually parties who are as in the past, who are actually actively buying and, and who are very interested in our, in our assets, we are only selling our assets when, when prices are right. We are still keeping up our prices or our price level that we had before.
With, these parties that are interested in the assets, they're still they're not phased too much by the, by the current market decision in the financial market. There the price is also stable. This is the only scenario where we sell assets, but we definitely see ourselves still as a, as a buying party, as a buyer.
There are two more questions from my side. First, could you indicate why you decided to change the date of the valuation of the portfolio towards September? Is it that you want to have the CapEx investments completed to see a bit of a stabilization in asset values here, or were there any other reasons?
No, it's just a technical reason. You know, we had, last year, our, our, valuation at the end of June, and, until September, which was our year-end, market conditions have completely changed. We, we have seen interest rate hikes and so on. Our auditors said, okay, they cannot, reconcile.
and then we had to do again valuation, and we want, we don't want to do that this year again. That's why we have decided to make the valuation now regularly at the end of September, because of the volatility of the markets.
The last 2 questions from my side is on the ex-Real asset in Trier. How much you intend to spend or need to spend to facilitate the transaction coming to an end? The second question on the letting volumes, you mentioned that the average WAULT remains fairly stable. How much you were able to rent out and or to extend, and what was the average extension in years, as well as the rent reversionary, rent reversion compared to the prevailing rent? Thank you.
We don't have any costs regarding the further development of the asset in Trier. For us, we don't have any costs. This is all on the buyer side. Regarding the extension, that's a little hard to measure because all of the assets, or all of the rental contracts, which are in negotiation, of course, have different different parameters lying underneath. So you can't really, or we can't really put a figure on that. Whenever we have higher investments or where we redevelop the asset, the main tenant has, has at least a lease duration or a new lease duration of 10 years.
The grocery stores and the retailers for daily needs usually have a lease extension of 15 years. That's, that's the least amount. Of course, we also then have additional options which can be made by the tenants. All in all, these are usually 3 x five additional years. All in all, that would be then 30 years if, if you were to calculate those, those options into your if you take this, this into your calculation as well, which is usually done by the retailers themselves. This is the time frame they are usually calculating with.
All in all, I think you, you asked for, for our recompensation. In these redevelopments, we usually or currently, we tend to have a yield of 9% on average, depending on the individual as- assets, which is a recompensation for our current investments.
Okay. Yeah, la- last one to clarify, what was the amount of expiring leases in or, in Q3, and you were able to extend or not in Q3? Just the, was it 5,000, 10,000 parameters, or do you have any number on that?
Normally, we don't any tenant potential to prolong leases. Not normally, if the micro location works for the tenant, then they keep their options and prolong by themselves, and we don't have to spend anything here. What we have spent is just CapEx to enhance the quality of assets, to give motivation to the tenants to stay or to come in newly to the properties. Normally, we don't pay any tenant costs.
Thanks so much.
The next question is from Andreas Pläsier, from Warburg Research. Please go ahead.
Yeah, good morning, gentlemen. I have two questions. Firstly, on the, on your FFO guidance, you guys, EUR 36 million to EUR 39 million. You now stand at EUR 27 million, and then you have a week to see Q3 figure of only EUR 7 million. What should be the drivers for an improvement in Q4? This was the first one. The second one, regarding the loans from Obotritia. We have only a small decrease yet in the, in the Q3. What are your assumptions regarding repayment till end of the business year? Because this could be positive for M&A and also for, for financing. Thank you.
Yeah. We have confirmed the guidance. Of course, when you, when you, when you compute, then we are at the seems that we end up at the, at the lower end of the range. Of course, we have a few drivers, which could also be further increases, of course, this could, could have an effect on the FFO also in this current financial year, which ends at the end of September, you mentioned. Regarding the loans, we have given to Obotritia, I mean, we have an agreement here with Obotritia that the funds will be repaid until the end of September. We have received collaterals on that to, to secure our receivables.
It's the responsibility of the main shareholder, of course. We expect that the funds will come until the end of September, as, as agreed.
Okay, thanks.
Thank you, everybody. Thanks for your questions. Thanks for your attention. Now we are ready to take your questions afterwards if you have some, and have a good day.