Thank you. Good morning, everyone. I would like to welcome you all to our full year 2024 earnings call. Our CEO, Kruno Crepulja, and our CFO, David Dreyfus, will walk you through our presentation and give you an update on our current business performance and our new outlook. As usual, this will be followed by a Q&A session. With this, I would like to hand over directly to Kruno.
Hello, everyone, and thank you for joining our Q4 earnings call. I think the very important message is that we have, once again, achieved all our goals in a still challenging market environment. We actually saw very strong Q4 sales momentum, especially in the retail business with both private investors and owner-occupiers, and we also managed to sign several institutional deals. As a result, we sold a volume of more than EUR 170 million in the fourth quarter, which has been our strongest quarter since Q4 2021. We view this as a clear confirmation that the market recovery is continuing. We currently see especially strong momentum from buy-to-let investors. At the beginning of the year, we launched the marketing and presales process of three projects: one in Duisburg, close to the border of Düsseldorf, one in Frankfurt, and one close to Stuttgart.
All of these projects are perfectly tailored to the promotion scheme from the Growth Opportunities Act. The feedback we are currently getting from the market is really very encouraging. Looking at the institutional market, we achieved the signing of one larger and also three smaller deals in Q4 2024, mainly with cooperatives and also a foundation. We are very happy with the result, but we don't want to overstate this. Overall, the institutional market is still in rather difficult shape. Many customers are still very cautious. Our discussions with our institutional customers suggest that we can only expect a more pronounced recovery in the second half of the year. The current uncertain macro environment also contributes to this. Another major achievement in the last 12 months was that we were able to further strengthen our balance sheet.
We have a strong cash position of almost EUR 270 million and also very low financial gearing with an LTC ratio of only 10.5%. This puts us in a very good position when it comes to taking advantage of attractive growth opportunities at the trough of the cycle. Let's now take a brief look at our financial KPIs for the full year 2024. We reached adjusted revenues of EUR 527.2 million, fully in line with expectations. Our gross margin remains at a high level of 22.6%, which was even slightly better than anticipated. We continue to view our margin as perhaps the best indicator of our operational excellence and leading profitability. We believe that this reflects the quality of our project portfolio and our cost leadership with our in-house construction management. Our adjusted earnings after tax amounted to EUR 36.9 million, a result which is in the upper half of our guided range.
On the back of a strong Q4, our sales increased by more than 56% to EUR 330.2 million compared to 2023. In the current market environment, this is also a result which we can be very satisfied with. Based on the result we have achieved and our communicated payout ratio of 30%, we are proposing a dividend of 0.26 per share to the next AGM. We believe that we have passed the bottom of the cycle, although revenue and earnings in our business will follow with a certain time lag. We therefore plan that the dividend of 0.26 should also mark a floor for 2025. For the current full year 2025, we expect a continued dynamic sales recovery as the key lead indicator of our business. We assume that demand will continue to rise significantly, but that it will still remain below pre-crisis levels.
Accordingly, we expect sales to reach a level of more than EUR 500 million in 2025. We again expect revenue in the range of EUR 500 million-EUR 600 million in 2025, although we are entering the year with a lower backlog of presales compared to the previous year. We expect a sustained, very healthy gross margin of around 23% and adjusted earnings after taxes in the ballpark of EUR 25 million-EUR 35 million. A key reason for the expected moderate decrease in the bottom line result is the release of capitalized interest costs with the start of sales of new projects. We expect that the continued sales recovery will translate into rising earnings in 2026 and beyond. We have, of course, all noticed the recent spike in volatility on the bond markets as a result of the potential investment programs planned by the new German government.
We cannot yet assess how the risk of sustainable higher interest rates and, on the other hand, improved growth prospects will affect our business. We have not yet been able to recognize any meaningful effects, at least not to date. We have had a significant increase in reservations since the beginning of the year, which has not changed materially due to the recent rise in interest rates, but we have still seen a few cancellations due to rising uncertainty. We continue to closely monitor the market and its implications for our business. Moving on to slide four in our presentation, our sales ratio on the upper chart illustrates the sound sales performance of our retail business in the fourth quarter. The most important customer group are the buy-to-let investors. Overall, our single unit sales increased by some 82% compared to the previous year's trough levels.
The steady upward trend over the last two years, including the typical seasonal effects, is also shown on the chart at the bottom. The development of the sales ratio also demonstrates that we saw the typical seasonal effects at the beginning of the year with a traditionally weaker seasonality. However, in recent weeks, we have again seen a nice pickup in demand. While we have already seen a certain positive impact from the promotion scheme of the Growth Opportunities Act in 2024, we are now starting to see much stronger effects. We launched the sales start of three new projects this February. All of these projects are perfectly tailored to the new promotion scheme, and they benefit from both the 5% degressive depreciation in combination with a 5% special depreciation over four years for energy-efficient buildings. This allows us for very attractive post-tax returns.
The initial market feedback is very positive. We have already signed the first notary contracts, and we have secured a substantial number of reservations. We observe that investor sentiment has improved over the past month. The rising awareness that property prices, especially for new builds in good quality locations, have bottomed out in combination with the rising rents and wages, is a key driver for this. Coming to the institutional business, we are very pleased that we were able to close a larger deal with a volume of almost EUR 70 million and also several smaller deals in Q4. We have already been able to sell a sub-project of the Grafental project to a foundation. We had acquired the land just a few months earlier. The return on capital is therefore very attractive for us.
In the Grafental project, we sold the affordable part, benefiting from attractive promotion schemes for the investor. However, it is still fair to say that the institutional market is still quite challenging. The political uncertainty in the run-up to the German general election and also due to the current political discussion around debt finance fiscal programs contribute to this. Our guidance takes into account a broader recovery of the institutional market in H2. We are already in talks with a number of institutional investors with regard to a number of specific projects. On the next slide, we provide a breakdown of our sales and revenues. Despite the successful signing of institutional deals, the share of this customer segment is significantly below pre-crisis levels. A stronger recovery of this customer segment is still the biggest swing factor.
In the coming month, however, we expect strongest momentum from the demand from private buy-to-let investors driven by the promotion scheme of the Growth Opportunities Act. On the following slides, six and seven, we provide you with an overview of relevant market indicators for our business. An important development in 2024 was certainly the bottoming out of prices for new builds. There are rising indications that prices in metropolitan areas have already passed the trough. In addition, an important value driver for our business, the end of deflationary pressure is also a generally very important factor for the uptick in demand as pressure on buyers has started to rise again. New-built apartments remain the first choice for investors, also due to the superior rental development. Rising property yields from dynamic rent growth were a main factor for the price stabilization in the market.
This ongoing positive rent trend is also confirmed by the recent data provided by Bulwiengesa for the top seven cities. Recent data even show a further acceleration in the fourth quarter. The positive underlying demand trend is reinforced by decreasing supply and therefore rising scarcity of energy-efficient apartments in good quality locations. Over to slide seven, which illustrates construction price inflation over time. The most recent data from the Federal Statistical Office confirm a continuation of the trend of the last few quarters with a moderate CPI growth. In the fourth quarter, the quarter-on-quarter price development decreased further. We actually believe that the market is showing a more differentiated picture. According to our own on-the-ground experience, the cost increase is very low, if any. Our explanation would be that there is fiercer competition among construction companies for the limited number of larger residential housing projects in the market.
We are clearly benefiting from this. All of our construction projects are on budget. We are convinced that Instone is clearly a cost leader in the industry. In our core product with our own construction management, and especially with our innovative nyoo product. Against this backdrop, we have started to offer our development services to third parties at very attractive price points while still generating attractive margins. Our subsidiary nyoo is currently in several discussions with third parties such as privately and publicly owned housing companies for development on their own land, translating into low CapEx requirements for us. Instone's ability to build profitably at low price points via its nyoo product was also the key success factor in closing the recent forward institutional deal of the Grafental project in Q4/2024.
Moving on to slide eight, as discussed in previous earnings calls, Instone has weathered the crisis very well based on its strong balance sheet, leading margins, and the high presales ratio. The latter has provided a sound basis for earnings and cash flow visibility. To give you just a brief update on this, projects worth EUR 2.8 billion are currently under construction, of which 92% have already been sold. This provides a stable source of future revenues of more than EUR 470 million, as well as for secure future cash flows of some EUR 190 million. Over the past two years, we have already generated substantial cash flows from these pre-sold projects under construction, as David will highlight on the following slides.
As soon as the market reopens more broadly, we will be able to accelerate our sales significantly with an existing land bank with projects that have already obtained building rights of around EUR 1.7 billion. We are currently also very active on the acquisition side in order to significantly increase our medium-term growth profile. We have already closed very attractive acquisitions in 2024, but we were still very selective overall as we still considered the asking prices of many sellers to be too high. The situation has now improved. Our patience is paying off. We are currently among the final bidders for potential project transactions with a sales volume of around EUR 4 billion and have already been able to agree exclusivity for transactions with a GDV of around EUR 500 million. We are therefore confident that we will be able to close further attractive acquisitions in the coming month.
I would now like to hand over to David for the financial section of the presentation. Thank you.
Thank you, Kruno. Let me now walk you through our full year 2024 financials in a bit more detail, starting on page 10. As Kruno has already pointed out, we are pleased that we delivered a very solid set of results and that we have reached all of our financial targets in a still challenging market environment. Fully in line with our expectations, our adjusted revenues are slightly below previous year's level, mainly due to the expected lower construction outputs. The bulk of the revenues was still derived from pre-sold projects under construction. The share will decrease in 2025, but this is expected to be compensated by a higher contribution from new sales. We have continued to produce high gross margins of 22.6%, which was even a notch better than expected.
Our profitability is still a benchmark in our industry, also compared to other listed peers with exposure to German residential development. As we already flagged in our previous call, there was temporary margin decrease in Q4 due to an expected change in the revenue mix. There was a high revenue contribution from a Westville sub-project with a lower margin, as well as from a lower margin office building, which was part of a larger project. Furthermore, we have sold all remaining units of our projects, which were completed in 2024. We do not have any remaining inventory risks from these projects. This is also exceptional in our industry in the current markets. Our platform costs decreased despite higher provisions for our LTIP due to a share price increase in 2024. Our underlying staff costs decreased quite substantially by around 11%, clearly showing that our interests are bearing fruit.
Further down in the P&L, we saw a significant decline in our net interest expenses. This was mainly attributable to a lower net debt and the related soaring interest income on our meaningful cash position. As a result, we achieved an adjusted earnings after tax of EUR 36.9 million in the upper half of our targeted range for 2024. We believe this is a very decent result in the current market. Over to page 11. Instone, during the crisis, very much benefited from a high backlog of pre-sold projects, which represented a sound basis for strong and predictable cash flows. We have already collected a large part of this. Due to the generated cash flow, we were able to substantially improve our balance sheet. Our LTC ratio dropped to a very low level of 10.5% at year-end.
Despite the lower earnings level, at the trough of the cycle, net debt to EBITDA is only at 2.1 times. This gives us ample headroom for acquisitions in an environment which we view as a buyer's market for land. Moving to the next slide. The pre-sold projects, as just mentioned, remain a substantial cash generator for Instone. Our strong operating cash flow of more than EUR 100 million in 2024 is shown in the table on the left-hand side. It was the second year in a row where we were able to generate such a high cash flow. Our selective approach on acquisitions was, of course, also a major contributor to this. The cash outflow for land payments was EUR 45 million in 2024, of which EUR 27 million relate to land acquisitions from previous years.
The two projects that we acquired in 2024, Lahnwarte in Frankfurt and Grafental in Düsseldorf, are already in the sales process. Indeed, there was just a cash payment of EUR 80 million for the Grafental project in Q4. Hence, I think this shows that we were able to negotiate quite favorable payment terms on those two acquisitions. This all leads to Instone's very strong liquidity position of almost EUR 207 million at year-end. Correspondingly, Instone has a significant net cash position on the corporate level. In addition, we have access to revolving credit facilities totaling around EUR 140 million. This comprises a new credit line of EUR 100 million that we signed at year-end. This is once again strong confirmation that we have full access to all relevant debt products in a financing market which is still very challenging for our industry. Instone is really in an exceptional position here.
After having signed two projects with a GDV of EUR 260 million in 2024, we are now in advanced discussions for several new deals in 2025. As Kruno has already pointed out, we currently have a substantial acquisition pipeline where we are among the final bidders and an acquisition pipeline with a GDV of more than EUR 500 million under exclusivity. Hence, we have reason to be confident that you can expect the signing of some very promising deals in the coming months. Over to chart 13, which gives us an overview of our financing structure at year-end. Overall, we have a very balanced maturity profile with low refinancing volumes in individual years, which also contributes to our strong financial profile. Finally, coming to our outlook on page 13.
As already pointed out, and although the uncertainty has somewhat increased recently, we expect the recovery to continue in 2025 with an institutional market which is expected to see a broader recovery in the second half of the year. However, we expect sound momentum in our retail business with tailwind from our recent sales starts in the coming months. Accordingly, we anticipate a sales volume of more than EUR 500 million in 2025. We again expect revenues in the ballpark of EUR 500 million-EUR 600 million, i.e., the same guidance range as in 2024. Revenue generation in 2025 will be supported by the remaining sales from our projects already under construction. We expect a sustained high gross margin of around 23% and a somewhat lower bottom line result, mainly due to the release of capitalized interest with the start of sales of new projects which are scheduled in 2025.
We expect the year 2025 to mark the trough of the earnings cycle, and therefore, it is our clear intention to keep the dividend for 2025 at least at a level of EUR 0.26 per share. With this, I would like to conclude the presentation and move on to the Q&A session. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, may press star followed by two. Questioners on the phone are requested to disable the loudspeaker mode while asking a question. Anyone who has a question may press star and one at this time. The first question comes from Philipp Kaiser from Warburg Research. Please go ahead. Yeah. Hello, everyone.
Congrats to the sound operating performance and for uncertain. Thanks for taking my questions. Just a couple from my side. I would go through them one by one, starting with 2 just for the clarification. With regards to your slide five in the presentation, the revenue mix and your target for this year, the column is just the announced guidance, and it's no indication for your expected revenue mix. Is that right? Yes, Philipp, that is correct. We do not provide guidance on our revenue mix. However, we can say that the previous year sort of indicates directionally also an indication for 2025. Okay. Thanks a lot. Thanks for the clarification. And then could you just quickly remind me, so for this year, you already secured sales worth 300 million. Is it still correct? That is correct.
We have sales this year which are secured, which is close to EUR 300 million. So not fully EUR 300 million. Okay. Thanks again for the clarification.(IVR) Not sales, sorry. It's revenue, just to be correct. Yeah. Yeah. Yeah. Thanks. Yeah. Sure. Then with regards to the Instone sales in the last quarter, with regards to closing, were all the closings expected in the last quarter, or were there any shifts? So, to get a feeling about the start of this year. So we had the signings last year, and there are no, let's say, major exit possibilities for the investors. So you can say you don't have this distinction signing and closing. It's more like signing, and then we, of course, have to construct the project. But there's no major exit possibility for investors. Maybe I can just add, Philipp. Sure.
We made a statement around the payment for those land plots, one of which was paid and therefore, if you wish, closed in 2024, and one of which we were able to push out the payment into Q1 2025. And therefore, closing, if you wish, only happened with the payment this year, but sort of we get ownership of that land at the time of signing. Oh, perfect. Thanks a lot. Then with regards to the material expenses, so in relation to adjusted revenues, it came down significantly. Can we expect or applicable this ratio for the coming years, or are there any major changes with regards to different materials? Can you maybe repeat the question? Sure. Sure. Of course.
So the material expenses, at least in relation to your adjusted revenues, came down significantly compared to the other years, which might be in line with the overall decline in construction materials. Can this ratio be applicable for the coming years? So can we expect a kind of sideways development of your material expenses, or do you see anything on the horizon which might increase potential construction materials or even a further decline? I think we have to differentiate between the material and expenses we have in the balance sheet where, of course, I think for the coming years, as mentioned, we see 2025, the trough regarding the revenue recognition. And therefore, we expect in the coming years, revenues going up, and of course, the material expenses also will accordingly go up. Regarding the material costs inflation, here, I think we've seen in 2024 parts of the materials inflating.
As you mentioned, overall, the CPI growth was flat, and this means that construction costs in total stayed flat. Going forward, I think we also expect for this year that construction costs should stay flat, but I would say the same situation like further material price inflation compensated by the acceptance of margins going down. The question, of course, is then how the potential freedom in, or let's say, the stop of the war in Ukraine has an impact, or how the infrastructure program could have impact. This is for us difficult to anticipate today because it will come, I would say, over the years.
So it won't be a direct, immediate impact, but I think that going forward, next years, there could be material price inflation driven by these two, let's say, impacts: war stopping and the infrastructure program, which is currently discussed today in Bundestag. Yeah. Okay. Thanks. I fully understood.(IVR) And then you already mentioned this defense and infra program. Apart from potential increase for material prices, do you see probably any other negative impacts, maybe with regards to the availability of craftsmen, for example? Any other implications for your business? So I think overall, the current construction market is suffering. When you look at our part of the market, so building flats and also office buildings, which are using the same source of workers, I think that, of course, if and again, I think we think that the order books are still weak of the companies.
Hopefully, the infrastructure program is helping many of the midsize companies to, let's say, stay alive. Otherwise, I think for us, it means we will see no cost price inflation. That's our personal, let's say, view. Of course, going forward, we will see CPI growth again. Will this be mainly influenced by the Infrastructure Act? I think it's a part of it, but it's not really impacting, let's say, the part of the business we are in. It's partly like schools or others. The whole streets and bridges are not the companies we are working with usually. This will have more an impact on material cost inflation, like concrete, etc. Here, we have the same source. Overall, I think there will be impact, but I don't expect this to come this year.
You know how long you need in Germany to plan a bridge and streets, etc. So it will take some time. Yeah. Yeah. Yeah. Absolutely right. Thanks a lot. Very helpful input. My last question. I know uncertainty is still there, and you also mentioned that probably this year you're going to be at the trough of revenues, at least trying to look a bit ahead, 2026 and beyond. Is it already possible to say when you will hit the 1 billion mark in sales volume? Will it already be 2026 or 2027, or still too uncertain to give it an exact date? So, Philipp, I think generally, our goal is to obviously get back to pre-crisis levels, as you have mentioned, which is sort of the 1 billion sales mark.
We hope to get there, and we will have more clarity during the course of this year. But it's still our intention to get there towards 2026. Okay. Perfect. And maybe one follow-up on your strong operating cash flow last year and also the year before. And you already mentioned there are potential acquisitions in the pipeline. So what can we expect for at least this year from your operating cash flow? Any insights that would be helpful? So that heavily depends on the acquisition pipeline. We also have, obviously, with the sales start of a lot of the retail product, initially, some construction phase where we use cash instead of building cash flow. So this year, the cash flow will look weaker compared to previous years. We will not provide a detailed guidance on cash flow, but it will definitely be weaker. Perfect. Thanks a lot.
Very, very helpful, detailed. I will be back in the queue. You're welcome. Thank you. The next question comes from Andre Remke from Baader Bank. Please go ahead.
Yeah. Good morning, sirs. A couple of questions also from my side. Thanks for the presentation. The first question is on the current situation in Germany. There are many moving parts concerning the political framework with today's decision and upcoming coalition talks, etc. What are your views on that? What are your expectations or graphs for your industry? And probably more important, what is the current reaction from institutional investors? Are they stepping back to a kind of wait-and-see modus? This is the first question, please. Should I start with the last one?
So we have been at the MIPIM fair recently, and there, the program of the government was clear, and also the rise of interest rate we've seen in the market. And what we are facing here, the reaction was from international investors looking more positive on Germany than the Germans themselves. But this is, I think, a normal reaction. Overall, I think, and we talked to many institutional buyers, I think that residential investments and here, new-built residential investments are seen as one of the most attractive areas. And here, let's say, the investors have appetite. Now, you mentioned the volatility. I think, of course, this is still there the case because we've seen a lot of changes in the macro politics. We've seen a lot of discussion, and I felt every morning opening the newspaper is a new news in the newspaper.
Overall, I think when I look prospectively, we strongly believe, looking at the appetite of investors, that there will be deals this year. We have been cautious regarding our guidance for this year. We think that the most activities from institutional buyers will come in the second half. We've seen also the last year and the last quarter already really good activities here. So we are still optimistic, and I think we had very, very good discussion on the MIPIM fair. Overall, the situation in Germany, I think, when you look at the infrastructure investments, residential is not mentioned directly. We think that we need more housing. That's for all the parties, I think, clear. We will see what brings us in detail. The program, when it's really worked out in detail, is there additional money for residential that would be positive, but we haven't calculated with it.
So our guidance we made for 2025 is looking at the sales activities we've seen in the past in the last few weeks and months. The ongoing sales start we have been very positive. So this encourages us in our view. But as said, I think volatility is still there. And if the market is staying as it is today and looking back in the last few weeks, we are confident that our guidance is a realistic scenario for this year. Okay. Perfect. This brings me to the second question. You mentioned that some institutional sales in the last quarter were supported by, how do you call it, favorable promotion schemes. What do you mean by that? And do you expect more to come here, or other way around, would those transactions not happen without such promotion schemes, whatever it is?
So we have, let's say, two main different schemes, and the social housing scheme is different from city to city, from state to state. But I think two main schemes, like the depreciation scheme, which is implemented by the Growth Opportunities Act and lasts until 2029. And this scheme, of course, gives our private buy-to-let investors really attractive terms to reduce their tax payments. And when you look at the double depreciation possibility by 10% of the investment costs over four years and then going down to roughly 3%, what this means, 40% in the first four years, is really attractive. And it's not nothing you can change from day to day. It's a tax law, which is due until 2029.
The second, let's say, scheme I mentioned with our Grafental project, this is related to subsidized social housing, where the EUR 20 billion the government has already implemented. It relates to this scheme where and here, it depends from state to state, from city to city. You get either, let's say, the biggest part of the construction financed with very attractive terms, or you can also get some kind of subsidy, which is a lump sum. You get per square meter. And this for Grafental, we have both. And this attracts investors because they are getting to decent cash-on-cash returns. And over the whole time period, social housing, subsidy housing, with attractive terms, attracted investors also in the last two years. When you look back at our institutional sales, they were always related to a subsidy scheme for social housing. Okay. Okay. I got it.
So there are no special promotion schemes, which only belongs to this transaction, but it's the overall state programs. Yes. That's true. Okay. Okay. Then I get it. Thank you. You are expecting sales volume of more than EUR 500 million. Could you split this up in your expectations, at least roughly, for the private and institutional side? So overall, I think 50% institutional, 50% private, and of the 50% private, I would assume that in total, 30% overall is buy-to-lets and 20% owner-occupiers, with, let's say, the possibility that the buy-to-let investors' space will be bigger. So here, we see extremely strong appetite from the first 3 sales starts. It could lead to more from the buy-to-let investor side. Okay. Perfect. And then the last question, on your acquisition pipeline or plans, you mentioned a substantial pipeline.
Are these advanced projects, or we talked in the past about that, or are there land plots in the pipeline? So what is potentially the mix here, and what could we expect in terms of gross margins in those pipeline projects? Could we apply, let's say, usual 25%? Is it right to assume? Yeah. So starting with the 25%, I would say yes. Of course, it depends on smaller project, bigger project, building permit already there. So these are the differentiators. But overall, I think 25% is a realistic approach. And this is also important. We have bought 2 projects last year. We wanted to buy more, but the sellers haven't accepted, let's say, in many of, let's say, the competitions we've seen in the market, haven't accepted the new price reality. And this is now different.
So we see that more and more land plots are coming into the market where the seller is expecting, after some push, the new price reality. And here, we have signed exclusivity for more than EUR 500 million. And these are more short-term-oriented projects. And then we have also, from the EUR 4 billion in total, where we have a, let's say, where we think we see the chance more than 60% to get there, we have different parts, let's say, different types of projects, also more long-term-oriented, but all are where the master plan has already been started. So it's more a 2-3 years time period we need for getting to the zoning. And a big part are more short-term-oriented projects. But the major change in comparison to last year is that we are seeing more and more chance in the market for really attractive land for reasonable pricing.
This is a main change in comparison to 2024. Okay. Perfect. That's from my side. Thank you very much. Thank you. The next question comes from Thomas Rothäusler from Deutsche Bank AG. Please go ahead. Hi. A couple of questions. The first one is on your guidance. Just wondering if your guidance would have been more upbeat, if you wouldn't have seen the recent rate hike. And maybe also on that, I mean, by when do you expect to have more color on the impact on sales activity from higher rates? So, Thomas, thank you for your question. We effectively have guidance of more than EUR 500 that we have set prior to the rate hike that has happened. And we feel, based on what we have also mentioned, what we have seen on the ground over the past weeks, that we feel still confident that that is the right level.
Obviously, we hope to outperform if rates move a bit again in our favor, the set 500 limit. Okay. And just wondering, I mean, if you look at the most recent dynamics in your sales activity, let's say, in the last 2-3 weeks, I guess it's still tough to assess the impact of the higher rates because it only happened the last 10 days or so. Therefore, I'm wondering, I mean, what is your experience also historically? By when, how quickly can you see the impact on actual sales activity? Yeah. Thomas, I think what's also important to mention is we recently started 3 projects for, let's say, the buy-to-let investor space.
We have here generated, and that's what David is saying, which makes us confident. We have made more than 100 reservations where we currently have, we are following the clients very closely to get to the notary deed. We have already signed contracts, and we have only very, very limited cancellations of the reservation. So what we currently face is clearly that, yeah, there is an interest rate inflation. Does it have major impact on our sales in the projects we are currently ongoing? I would say not really a huge implication. So this is one. The second is, for buy-to-let investors, the interest rate costs could be deducted when you look at overall the income tax scheme. So it's not really impacting in the same way maybe as the owner-occupier business. Okay. Got it. Yeah.
Also, I mean, coming back on the recent rate hike, I mean, do you think this could impact also the sector overall again with regards to maybe for the distressed sales, which actually you could benefit from by maybe even more acquisition opportunities? I fully agree. I think what we have seen already in the discussion and negotiation, that the sellers, they've seen the sun going up again and trying to play like, "We have time." Now, it's different because I think that this further rise in interest rates, I think, pushed them further to make a closing or signing. I think the sales and acquisition, of course. But overall, again, I think looking through this volatility, I strongly believe that supply-demand imbalance is making its way because the rent prices are inflating massively.
And the further the whole construction activities went down, and this is increasing further the pressure on the market. So overall, I think it's a good market, and we will see prices starting to rise again. And we have to look through this volatility. And that's the way how we look at this market, currently. Okay. And last one is actually on this capitalized interest you've released due to the start of new projects. I mean, what is the magnitude, roughly, what we should consider in your guidance? So the capitalized interest that is being released is approximately somewhere between EUR 10-15 million. Okay. All right. Thank you. Thank you, Thomas. As a reminder, if you want to ask a question, please press star and one. The next question comes from Manuel Martin, ODDO BHF. Please go ahead.
Thank you, gentlemen. Just one question.
I'm looking at the slide number 14 on the guidance. Maybe you can explain again the range of the adjusted earnings after taxes, which is lower than in 2024. You explained it already. I think it might have to do with capitalized interest. But maybe you can lead or remind me again how this affects the lower earnings after taxes. Guidance, please.
Yes. So just let me just give you a couple of sentences on how we book our interest. So during the phase pre-sale start, we capitalize interest, and we start releasing those again once we go into the sale start. As we have a lot of sale starts happening during 2025, you will see those capitalized interest falling fully into the interest expense line, which increases the total interest expense by the order of magnitude that I've just mentioned before.
Effectively, if you deduct that from the net income level that you have seen in 2024, that gives you the difference between where we were in terms of guidance last year and the guidance that we have given for 2025. Okay. Okay. No, good hint. I will have a closer look to that. Thank you. Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Burkhard Sawazki for any closing remarks. Thank you for your participation. If you need further information, please do not hesitate to contact Instone IR team. Thank you very much. Goodbye.