Welcome to the Hamborner REIT Q1 2026 financial results conference call. For the first part of the conference call, the participants will be in listen only mode. Now I will hand the conference over to the speakers. Please go ahead.
Yeah. Good morning, ladies and gentlemen. This is Niclas Karoff for Hamborner REIT. Thank you for joining our conference call regarding our figures for the First quarter of 2026. I'm pleased to be here today together with members of our team, including my colleague, Christoph, from IR. As usual, I will begin with a brief presentation, after which we will open the floor for a Q&A session. We hope everything will run smoothly from a technical standpoint and look forward to engaging with you. Let's start with an overview of the key figures as of 31st of March , 2026.
Influenced by our disposals over the past 12 months, the income from rents and leases declined moderately by 1.9% to EUR 22.6 million in the first quarter. FFO decreased by 1.6% year-on-year and amounted to EUR 11.7 million or EUR 0.14 per share. During the first quarter, financial and portfolio figures overall showed a positive development. EPRA NAV and LTV were positively influenced by the stable revenue and also the earnings development, as well as a value adjustment within the property portfolio, resulting in a value of EUR 9.27 per share and 43.1% respectively.
Operating performance remained resilient with a vacancy rate and total portfolio WALT at solid levels of 3.5% and 5.2 years. As always, we are going to provide more details on the next slides. First of all, a closer look at earnings performance. From the management of our properties, income from rents and leases amounted to EUR 22.6 million. As noted before, the 1.9% year-over-year decline came primarily due to property disposals completed in the first half of 2025, as well as in the first quarter of this year.
In the first quarter, income from ancillary cost allocations increased by 16%, driven by higher prepayments, including effects from the restructuring of our facility management. In contrast, operating expenses rose at a comparatively moderate rate of just 2.1%, which is primarily attributable to the disposal of properties with higher non-recoverable operating costs. Maintenance expenses decreased slightly on the first quarter and amounted to roughly EUR 1.4 million. The costs related to ongoing minor maintenance and various smaller plan measures. As in previous years, major maintenance projects and especially larger tenant improvements already announced in connection with our full year guidance are scheduled for the second half of this year. Personnel and admin expenses increased by around 5% and 12%, respectively.
On the one hand, this is due to the expansion of personnel capacities and the filling of vacant positions. On the other hand, the rise in admin costs mainly related to our upcoming annual general meeting, where costs, in contrast to the past, have partly been recognized already in the first quarter of the year. Other operating expenses were lower compared to the previous year, influenced by reduced external consultancy costs. Interest expenses slightly decreased in the first months of 2026, mainly due to the refinancing at higher interest rates in the second half of 2025. They increased, I mean, first months.
On the other hand, lower interest rates for cash deposits led to lower interest income. Total FFO for the first quarter amounted to EUR 11.7 million or EUR 0.14, down only 1.6% compared to the previous year period. Next slide, we'll briefly review the development of our portfolio key figures. Following the transfer of the recently sold DIY property in Ditzingen in the first quarter of this year, our portfolio currently consists of 63 assets. Apart from this disposal, the portfolio development was influenced by a value enhancement of our office asset in Cologne, resulting in a total portfolio value of approximately EUR 1.34 billion as at the end of March.
EPRA vacancy rate remained unchanged compared to year-end 2025 at a low level of 3.5%. Total portfolio WALT, as pointed out before, also remained largely stable at 5.2 years, with terms of 6.3 years for the retail and 3.8 years for the office portfolio. Concerning rent development, on a year-on-year basis, our like-for-like annualized rental income again increased by 0.8%, primarily driven by indexation effects, especially in the office portfolio. The positive impact of indexation was partly offset by a higher vacancy level and slightly lower rent levels for follow-up leases, which are partly the result of numerous indexation-driven rent adjustments over the past 2.5 Years.
On an annualized basis, the disposals of our properties in Osnabrück and Bückeburg last year, as well as the retail asset in Ditzingen this year, resulted in a reduction in rental income of EUR 4.1 million or 4.5%. As at the end of March, our annualized rents amounted to EUR 87.8 million. Concerning tenant structure, compared to the end of 2025, only minor changes happened within our tenant structure, primarily driven by index-linked rent adjustments and property disposals. The combination of sector diversification and the high stability of our top tenants continue to ensure the sound development of our operating business, even in a macroeconomic environment that remains challenging.
On leasing situation, a further aspect of this is the consistently high level of tenant satisfaction, which is shown now on this slide here. Since the beginning of the year, we achieved several letting successes with a total contract volume of nearly 10,000 sq m. As in recent years, the majority of this was attributable to contract extensions and the exercise of options by existing tenants. Once again reflected in a high retention rate of around 89%. At this stage, Hamborner does not expect any major cluster risks in connection with upcoming relettings in the coming years. This is clearly illustrated in the lease expiry schedule shown at the bottom of this slide. On the financing side, our company remains in a very solid position.
With 43.1%, our LTV remains at a comfortable level and furthermore within our current target range. Total debt remains largely stable, slightly below EUR 640 million. The average interest cost slightly increased to 2.2% following our refinancing activities over the last three quarters. As we are currently tending to opt for shorter loan terms between three and seven years, the average term has been slightly reduced to three years. Further debt metrics also remained largely stable with the net debt to EBITDA ratio at a level below 10% and an interest coverage ratio of 4.5%.
Yeah, regardless of the still challenging financing environment, the high quality of our portfolio and our extensive and reliable network of banks give us confidence in our ability to successfully complete the financing tasks ahead. Finally, I would like to give a brief outlook. The company's annual general meeting will take place in early June. We propose to distribute 65% of our operating income generated in 2025, which corresponds to a dividend of EUR 0.39 per share. To date, our operational performance has been in line with plans. Yeah, we are optimistic about the remainder of the year and confirm our current full year guidance.
Our rental income for the full year 2026 is expected to be between EUR 87.5 million and EUR 89.5 million. Our assumption for the FFO range between EUR 38 million and EUR 42 million. The operating result will be influenced in particular by the cost development in the areas of maintenance, personnel expenses and interest. With regard to these cost categories, we will continue to act with high discipline and try to achieve a balance between current financial burdens and securing future growth and cash flow prospects. Regardless of the recently announced strategic adjustments, which include a growth focus on retail properties, a widened acquisition profile, as well as a reduction concerning our office exposure, our guidance currently does not take into account any further transactions.
We have recently started sales activities for the first office properties and are simultaneously examining further acquisition opportunities. However, based on the current outlook, we expect potential transactions to have only a minor impact on this year's revenue and earnings development. We'll keep you informed on our progress and, if necessary, update our guidance during the course of the year. Yeah. With that, ladies and gentlemen, I would like to conclude the short presentation and open the floor for your questions. Thanks so much for now for your attention.
The next question comes from Thomas Wissler from mwb research AG. Please unmute your microphone.
Yes, hello. Thanks for taking my question. Just wanted to follow up on your recent statement regarding the property disposals. Can you maybe add some colors on how long this process will take? Is it an exercise which might take a couple of years? What do we have to expect in terms of timeframe of exiting the office segment?
Yes, Thomas, good morning. This, thanks for your question. Regarding the disposal plan for and the, for the office properties, yeah, we anticipate a midterm perspective here. If I say midterm, we are talking about, let's say, four or five years. It might be run up to six years, but that, that's how we define midterm year for us. We don't see ourselves to be in a hurry. We want to do it in a disciplined way. Obviously it's also strongly connected with what we see on the acquisition side on concerning the further development of the retail market. The two things always have to be connected.
Great. Thank you very much. If I may, just one more follow-up question. If I see your FFO, the run rate in Q1, if I just do the math and simply multiply this by four, I would get to a number which is exceeding your upper end of the guidance range. Is it fair to assume that in the second half there will be more a burden coming from refinancing? Or where, or what, where do you think you will remain with your guidance in the FFO range?
Thomas, I think there are a couple of things which have an influence here or which will have an influence here anticipated from our side. Obviously, are the effects from financing costs, which you see more or higher financing costs, which you see to a larger extent in the second half. Secondly, I mean, if you look at the maintenance history on our side, it's quite usual that typically during the second half, maintenance, the part on maintenance is going up. Concerning the overall maintenance throughout the year, it's especially focused during the last five, six months.
On top of that, we also anticipate as of today, higher expenses compared to the first half of the year for IT related costs. Yeah.
Perfect. Thanks, Niclas.
As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. The next question comes from Philipp Kaiser from Warburg Research GmbH. Please go ahead.
Yeah. Hello, everyone. Thanks for taking my question. Following up on the maintenance expenses below last year Q1. You mentioned it also during the presentation that the majority of those planned maintenance is scheduled for the second half of the year. How much of this is already locked in compared to planned in the second half of this year?
Yeah. I mean, there are various measures, I think, from today's perspective. Obviously, we are talking about several individual measures here. As of today, I think it's fair to assume that several measures have been locked in already. I mean, for us, please take into account that the overall expense we are planning here are also influenced by tenant improvements. Tenant improvements, apart from other regular maintenance, is sometimes really very difficult to predict concerning because if you're still in negotiations, final negotiations, for instance, with upcoming tenants for upcoming leases, then there's quite some movement still in there, who's responsible for the final investments. Is it the tenant or the landlord, for instance?
This can move the needle, quite substantially. Just as an example. Yeah.
Perfect. Thanks a lot. Next one is on your maturity profile, especially on the upcoming years, 2027, 2028. Any concrete plans already to tackle this maturity scheduler?
Yeah, I mean, what we did in the past two years was seeing that there are stronger refinancing needs to move everything or to start the discussions with our banking partners on the financing side earlier than we did in the past. That's what we are continuing as well for the next tranches for 2027, 2028. I think we provide a lot of visibility to our financing partners concerning our refinancing. We start pretty early in the discussions.
Also the experience from last year has shown that sometimes sort of rather minor reasons like simply existing resources then for final details, it takes a bit longer than expected, and that's another reason for us to start quite early on those. This has no fundamental influence or had no fundamental influence finally on the positive outcome. We are very optimistic as of today.
Okay. Thanks for the clarification. What's your, kind of indicative all-in rate on, for you and, you know, currently being quoted on five to seven years secured bank debt compared to the 2.1%, 2.8%? Any major changes expected waiting on FFO?
You mean the total cost now, that we are currently based on today's financing level that we have on financing costs for refinancing or?
Yeah, exactly.
I'd say it's around, let's say, around 4%, a bit higher than 4%. If you look at the current swap rate on a five-year term, for instance. Obviously, it depends on for which term we fix the rate and what kind of assets we are talking about, et cetera. All the influencing variables here. That's around the number. Let's say the high 3%-4%. Let's say roughly between 4%-4.3%. Concerning the FFO, we would expect a compared to 2025 financing cost approximately 10% increase.
Okay. Thanks a lot. Very helpful. On your valuation, you uplift the Cologne office building. Could you shed some more light on the driver behind this uplift? It's quite meaningful. It's like almost 10%.
Yeah. Yeah. Yeah. This was That's right. It is a quite meaningful one. That is the reason obviously. I mean, the reason for this is rent related. We get higher rent, substantially higher rent. Therefore, we, this was the conclusion here on the valuation side. It was, yeah, that is the reason behind it.
Okay. Thanks a lot. Very helpful. The last one, out of curiosity. I think there was this REIT Act in February allowing REITs to operate in more in renewables and charging infrastructure. Any tangible plans for Hamborner here? Any first thoughts, meaningful changes expected?
I mean, we are still internally analyzing really the effects from it. The reason for this is, I mean, first of all, I'm very grateful that and happy that there's more flexibility now. I think it should help us in certain areas. Personally, I don't expect a major wave of opportunities coming from it. But in certain areas it should help us. We have analyzed the potential internally here that we can take from this. And it would help us, I think on the energy side, concerning how we handle, for instance, investments concerning solar systems on rooftops, et cetera. It will give us more flexibility on this.
You always have to take into account that, apart from the legal framework, you have the situation and the assets itself. It's not the case that we would be able to install in a large scale solar panels, for instance, across all our assets and run these technical systems. Because sometimes you have other burdens that you have to cover. It's a mixture across the portfolio, but clearly it gives us more flexibility in further discussions with our tenants and with business partners here. We also clearly based on our sustainability strategy anyhow have the interest to implement as much as possible, which helps us here on our decarbonization target.
Thanks a lot. Fully understood. All from my side.
There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.
Yeah. Thanks so much again from our side, and hope to talk to you soon and have a good remainder of the week. Thank you.