Now I will hand the conference over to the speakers. Please go ahead.
Yes, good morning, ladies and gentlemen. This is Niclas Karoff for Hamborner REIT . Thank you for joining our Half-Year Results Conference Call. I'm pleased to be here today with members of our team, including my colleagues Sarah and Christoph. As usual, I will start with a short presentation followed by a Q&A session. While in the past, participation in the Q&A was only possible by telephone, you now also have the opportunity to ask questions via the webcast directly in your web browser. We hope that everything will run smoothly from a technical perspective and look forward to interacting with you. Let's start on this slide with a look at the key figures of June 30, 2025.
The real estate sector continued to face headwinds during the first half of 2025, at least overall, with a challenging financing and interest rate environment, increased complexity of rental markets, persistently high construction costs, and transaction market development that still hasn't reached previous levels overall. Regardless of this, Hamborner's business performance remained largely on track in the first half of the year. As a result of the recent property disposals, income from rents and leases decreased by 2.1% to EUR 45.7 million in the first six months of this year. Influenced by the property sales as well as increased costs at the operational level, FFO came down around 12%. Key financial figures showed moderate changes with an LTV increase to 44.3% and a corresponding decline in the REIT equity ratio to 55%. Operational performance remained largely resilient with a vacancy rate of 3.5% and a portfolio WAULT of 5.7 years.
Further details, as usual, will be shown on the following slides. Let's move on here to the rent development. On a year-on-year basis, our like-for-like annualized rental income rose by 1.4%. It was mainly reflecting the impact of indexation adjustments. The positive indexation effects were partly offset by slightly lower rent levels on the re-letting side, mainly within the office portfolio. The disposal of the office properties in Hamburg and Osnabrück, as well as the retail asset in Lübeck, resulted in a rent decline of 3.5%. At the end of June, our annualized rental income amounted to EUR 88.6 million. On the next slide, a more detailed look at our earnings situation. As already mentioned, income from rents and leases declined by 2.1%, which is primarily attributable to our strategic asset sales.
As already predicted in our initial full-year forecast, we saw an increase in maintenance costs in the first half of the year, which amounted to approximately 27% compared to the previous year. The expenses related to ongoing maintenance activities, as well as several larger measures implemented or initiated in the first half of the year. Administration expenses rose by approximately 17%, primarily driven by the continued further development of our IT infrastructure. Personnel expenses increased by nearly 15% year-on-year, reflecting workforce changes or changes within the workforce over the past 12 months. Other operating expenses increased by approximately EUR 2 million, mainly comprising costs associated with strategic and regulatory projects, particularly in the areas of digitalization and sustainability. Declining overnight deposit rates led to lower interest income, which amounted to approximately EUR 0.3 million in the first half of 2025.
All in all, funds from operations totaled EUR 24.8 million in the first half of the year, with a corresponding FFO per share of EUR 0.31 per share. Going on to the topic of disposals, with the transfer of ownership of the properties in Lübeck and Osnabrück at the beginning of the second quarter of this year, the most recent disposal activities have been successfully completed. The disposals were realized approximately at the level of the most recent market values and corresponded to a total transaction volume of EUR 27.4 million. In connection with our full-year forecast published in February, we had announced another property disposal, which however has not been completed as anticipated in the first half of the year. Accordingly, this property will remain in our possession for the time being and will continue to contribute to rents and FFO in the remainder of the year.
Let's now turn to an overview of the portfolio KPIs. Following the closing of the transactions in April, the number of assets has been reduced to 64 as at the end of June. Due to the changes in the respective rental situation, we reclassified two properties in our managed-to-call portfolio at the end of the first half of the year: a retail property in Hallstatt and a smaller office property in Darmstadt. In contrast, the previously existing managed-to-call property in Lübeck was sold, meaning that the sub-portfolio now consists of five properties, which account for 5.7% of the total portfolio. As at last year's half-year reporting date, we did not carry out a portfolio-wide external asset valuation. Nevertheless, in consultation with our external appraiser, we made selective fair value adjustments for four office and retail properties, which were primarily attributable to the respective location and letting situation.
In total, the adjustments resulted in a decline in fair value of EUR 7.3 million or 0.5%. Taking into account the property disposals and the impairments, the fair value of the total portfolio decreased by EUR 34.7 million in the first half of the year, standing at around EUR 1.406 billion as at the end of June. The April vacancy rate increased slightly to 3.5% during the course of last month, mainly caused by additional vacancies within the office portfolio. The total portfolio WAULT remained stable at 5.7 years during the second quarter, with terms of 6.9 years in the retail and 4.1 years in the office portfolio. Moving on to the tenant base, the largely stable performance of our operating business is also reflected here in the consistency of our tenant structure. There have been only smaller changes in our top tenant and sector allocation lists.
These shifts are primarily attributable to our sales activities as well as indexation effects. Going on with the leasing situation, as illustrated on this slide here, we achieved a number of leasing successes in the first half of the year, signing contracts for more than 12,000 square meters. Office space accounted for the vast majority of this volume, representing approximately 94% of the total letting result here. At around 95%, the retention rate remained at an extremely high level. We think once again reflecting continued overall satisfaction among our existing tenants. With regard to the rental volume, only 0.9% of the annualized rents are up for renegotiation or re-letting during the remainder of the year. This puts us in a comfortable position, and at the present time, we are confident to be able to complete our remaining rental tasks here. Let's move on to the company's financial situation.
Our financial liabilities declined substantially in the first half year of 2025, primarily due to the repayment of our remaining bonded loan in March, as well as the loan repayments in connection with our latest property disposals. Following the dividend payment in June and the individual value adjustments within the property portfolio, April LTV rose 0.6 percentage points year to date, and it amounted to 44.6% as at the end of the second quarter. Accordingly, REIT equity ratio slightly declined to 55%. Given the limited refinancing requirements during the first half of the year, average interest costs remained at a low level of 1.9%. Average loan maturity has slightly declined to 3.1 years. Concerning key debt metrics, EBITDA ratio of 10 and interest coverage ratio of 5.3. The 2025 debt maturity schedule indicates only minor refinancing requirements in the next weeks.
We are currently finalizing the refinancing of a loan expiring in September, and we intend to sign the corresponding agreement shortly. The loans expiring in the fourth quarter are due at the end of December. Based on our financing strategy for each asset, we are predominantly already in advanced discussions with our credit partners. Let's now turn to the outlook for the second half of this year. Despite the ongoing macroeconomic challenges and also uncertainties, the company remains fundamentally positive about further business development in the remainder of the year. Positively affected by the suspension of the disposal process already mentioned before, which had been included in our initial forecast for 2025, we now expect a slightly higher rental income for full year 2025 in a range between EUR 89.5 million and EUR 90.5 million.
Our slightly adjusted revenue forecast is not only influenced by the sales activities, but also affected by higher income from rental agreements signed during the year. Taking into account the expected increase in operating costs, we continue to expect a full-year FFO in a range between EUR 44.0 million and EUR 46.0 million. With that, ladies and gentlemen, I would like to conclude the presentation and open the floor for your questions. So far, thanks so much for your attention.
If you wish to ask a question, please dial the pound key followed by five on your telephone keypad or click the raise your hand icon in the lower right corner of the video player to enter the queue. To withdraw your question, please dial the pound key followed by six on your telephone keypad if asking via phone or click the raised hand icon again, which will appear as an X to cancel your request when using the video player. The next question comes from Thomas Neuhold from Kepler Cheuvreux. Please go ahead.
Yes, good morning. Thanks a lot for the presentation and taking my questions. I actually have three questions, and I think the best is we take them one by one. I would like to start with the guidance. You slightly increased your revenue guidance by a midpoint of EUR 1.5 million, but you did not increase your FFO guidance. Does that mean that your cost base will also increase by a similar amount this year? What is the reason for that? That's the first question.
Yeah, good morning, Thomas, and thanks for the question. Let's put it this way. We decided to be a bit more cautious here on the FFO side because we have various influencing factors here on the cost side, starting on the concerning technical investments, for instance, which obviously represents a large portion within our cost structure. We were facing here during, just to give you an example from the operating side, during the first half of the year for a few properties, some additional measures that we hadn't planned. No big deal, but still, you can't concerning the amount, the number of measures which are behind so many assets here, so that we are a bit more cautious. Just to give you an example.
On top of this, obviously, we have a number of running projects here internally, which also provide additional cost, and therefore, we decided to keep the FFO forecast as it was before.
Understood. My next question is on these revaluation loss of 0.5%. I think you mentioned that only four assets were revalued. Can you give us an indication what the like-for-like revaluation on these four assets was?
I mean, don't fix me exactly on the numbers, but I think it was in a range between, it started around 4% on the lower level, and I think on the upper level, it has been around 9%. Yeah, so between 4% and 10%.
Okay. Just to remind me, in the past, did you carry out the revaluation at the half-year, or you only did it, I think, yearly, if I remember correctly? This was just driven by asset.
Yeah. Actually, we looked at it. It was different across the years. Sometimes we didn't do any revaluation during the half-year. There have been two incidents when we did a full external revaluation. This was just as an example during COVID. It was, if I remember correctly, during the phase when we had a lot of movement influenced by the development of the interest rates. Last year, we were applying the same. We were looking, I mean, obviously, we looked through our portfolio on a regular base, but picking individual assets, that's something we did as well last year.
Okay. Understood. My last question would be on the rental market outlook. What is your expectation of the rental market will evolve over the next 6 to 12 months?
I think it hasn't changed a lot. We see that rental contract negotiation sometimes takes longer. Certain topics that have to be covered in a wider sense relating to sustainability issues, for instance, energy management-related and data-related, so that we hopefully get more access to data with the support of the tenant, which we then need for our further internal analysis. Just to give you a few examples, these are things that tend to take longer in the discussions, but overall, fundamentally, no major changes here during the last six months.
Okay, thanks a lot.
The next question comes from Andre Remke from Baader Bank AG. Please go ahead.
Yeah, good morning, Niclas. Basically, two questions left. First is on the planned but not materialized disposal. Could you get some color on the recent year, and is the property still on the disposal list? Probably more in general, could we expect any disposal activities this year? This is the first question.
Yeah, I mean, maybe with the second question, to answer the second question first, Andre, we expect no further impact from disposals for this year as of today. Concerning your first questions, as we always pointed out, we want to keep discipline not only on the acquisition side, but also on the disposal side. There can always happen something on the disposal side during the transaction where we finally then say that we don't come together with a potential buyer. On top of this, for this asset, which we talk about here, in the last couple of weeks, we decided, apart from our strategic approach concerning this asset, concerning sales, that there might be reasons as well to keep it, or that might make it more attractive to keep it on our balance sheet.
Therefore, we are in a phase at the moment where we have to make up our mind if we give it back to the sales process again or if we maybe do something else with the asset here from a strategic asset management point of view.
Okay. Coming to the office side, the acquisition side, in the last call, you mentioned that you had a lot of potential acquisitions on your table. Is that still the case?
I would say it's not that we have a huge pipeline, but we are currently, let's put it this way, a bit more active on the acquisition side here. It's too early to go into detail at the moment. Fundamentally, not much change in the market, but obviously, based on the fact that we are scanning the market intensely, once in a while, there come attractive assets across on our table, and then we have to decide if we look at them in a more detailed way. At the moment, it's a bit more active than during the first half. Let's put it this way.
Okay. It brings me to the last question. You have a cash position as of June of only EUR 9 million after the dividend payout. How would you finance the potential equity?
Obviously, we have our refinancing going on, and this refinancing also gives us, in certain cases, the option to add additional debt. Therefore, we could generate here additional cash flow, which we could use also for an acquisition. On top of this, just to let you know, we also have some unencumbered assets here on the balance sheet.
Do you also have a credit line?
We also have a credit line, but that's typically the credit line we use. We have in place at the moment, that's really as a reserve. That's something we don't use for acquisitions as of today here.
Okay. Perfect. That's from my side. Thank you.
The next question comes from Kai Klose from Berenberg. Please go ahead.
Yes, very good morning. I've got two questions, if I may. The first one, you say on page four in the H1 report that you had a slight decline in like-to-like rents of -0.3%. You say on page seven that you had higher income from tenancy agreements signed in the course of the year. I just want to understand or want to understand if all of this can be bridged that you had a negative like-to-like and higher income from tenancy agreements. Last one, as a reason for the slight write-down on a few assets, you also mentioned that this was due to leases adjustments. Maybe you could help us understand and to bridge these aspects.
Okay. Concerning the first question, I mean, it's a matter of what you look at. We are talking about point-in-time calculation versus a time period. We are talking about lease agreements that we have agreed on during the first half of the year, for instance, where the increase of rents then and the effect from it comes in the future, starting in the second half. Therefore, based on this, you can get some differences here, yeah.
Okay. When you mentioned as a reason for the EUR 3.73 million write-down, the changed discount in capitalization rates and rental factors, I would assume that is because you have assigned or you expect some kind of lower rents in re-lettings or in future periods?
Yeah. I mean, rental factors had an influence here on this one. There were different individual situations for these assets. There's not one reason which goes along all the assets that we did a revaluation here.
Okay.
In the second question, I'll give you an example. If you have an asset, if you have a certain change in market rents, then you can have an effect on this individual asset here.
Okay. Second question, the 150 bps we have seen in vacancy rates in offices in Q2. How much of the 6.1% vacancy rate, FRA vacancy rates in offices as of June is now structural?
I'm sorry. Did you say it's structural? I'm sorry.
Yes. How much of that would you regard as structural vacancy rate?
No. As of today, from my understanding, there's no structural vacancy associated to this.
Thank you.
As a reminder, if you would like to ask a question, please dial the pound key followed by five on your telephone keypad or click the raise your hand icon in the lower right corner of the video player. The next question comes from Philip Kaiser from Warburg Research GmbH. Please go ahead.
Yeah. Thanks a lot for taking my question. Actually, just one small additional question left from my side also with regards to the planned disposal, which did not materialize. Are there any negative implications on your KPIs coming with the potential delay of the planned disposal? I would guess that asset was earmarked for a reason for sale. Any major maintenance, which you now have to carry out in the foreseeable future or no real negative implications? That would be my question.
I mean, if you talk about KPIs, let's say two KPIs that are relevant here on the WAULT side, I mean, if nothing else changes within the asset, it would have an impact on the WAULT. If you see the overall WAULT situation across the portfolio, the impact should be really very, very minor. Secondly, on the FFO, I mentioned it already before during my presentation, we obviously expect a positive impact because of the rents that we are able to generate here for the time being. That's what I can say. No major deal from our side here.
Okay. Perfect. Thanks.
As a reminder, if you would like to ask a question, please dial the pound key followed by five on your telephone keypad or click the raise your hand icon in the lower right corner of the video player. There are no more questions at this time. I hand the conference back to the speakers for any closing.