Ladies and gentlemen, thank you for standing by. Welcome and thank you for joining the TAG Immobilien AG Interim Statement Q3 2022. Throughout today's recorded presentation, all participants will be in a listen-only mode. The presentation will be followed by a question and answer session. If you would like to ask a question, you may press star followed by one on your telephone touch key. Please press the star key followed by zero for operator assistance. I would now like to turn the conference over to Martin Thiel, CFO. Please go ahead.
Yeah, many thanks, good morning, everybody. Welcome to our Q3 earnings call. I mean today, clearly, perhaps the most important points to discuss are the new guidance for 2023 that we have published today, and of course, also our decision on the suspension of the dividend for financial year 2022. We will have definitely time to discuss this in the Q&A afterwards, and I will of course also elaborate on our thoughts behind. Let me please start with the highlights for the operational business in the third quarter 2022, which you see for Germany on page number four and for Poland on page number five. Both of them, I think, show that the business itself is running very well.
For example, in Germany, we are in the meanwhile in a vacancy rate of our residential units at 4.8%, coming from 5.5% at the beginning of the year. Means already at the end of the third quarter, we have basically achieved our guidance, which stood at 4.8% as target vacancy rate, and there's still a good chance to overachieve this guidance. We can tell you that as of today, we're already slightly below 4.8%. Same is true for the like-for-like rental growth year-on-year, including vacancy reduction. This number came in at 2.5% at the end of the third quarter compared to a number of 1.3% for the financial year 2021.
Also here, we are already above our guidance, which stood between 1.5% and 2.0%. As a result, FFO I, which is still purely coming from the German rental business, increased year-on-year by 7% and was at EUR 49.1 million. If you do a simple calculation and put this number additionally on top of the first nine months, you will see that we're clearly on a very good way to achieve and perhaps even to slightly overachieve our FFO I guidance for the full year. Quick look at EPRA NTA and LTV. Basically, the numbers at the end of the third quarter are very similar to what we have guided to with the half year as we also presented pro forma numbers after the rights issue.
Now the EPRA NTA stands at EUR 22.21, and the LTV came down from formerly 47% as a result of the rights issue now to below 45%. Talking about acquisitions and disposals in Germany, there was just one acquisition that you already know from the, from the second quarter. This was, yeah, more or less an exception for this year, we can clearly tell you that there are no further acquisitions planned in Germany. On the other side, we have achieved to sell in the first nine months of 2022 725 units for a total selling price of EUR 37 million, which is a disposal that led to a book profit of EUR 1.5 million.
Speaking more generally about the disposal program in Germany, you know that together with the rights issue, we announced a disposal program for altogether 200 800 units with a targeted net proceeds around EUR 300 million. This disposal program will clearly continue as we expect now the closing of a first tranche of 300 units with net proceeds of roughly EUR 40 million. We have adjusted this because of the closing to a remaining roughly 2,500 units and with a rounded number expected net proceeds of around EUR 250 million. What we clearly need to accept and what is clearly a consequence of the at the moment very limited investment market is that we're not able to sell these apartments as quick as originally planned.
We have to postpone this into the next months and quarter and also with the today's decision of the dividend suspension, simply we want to have here more time to do the assets disposals in a way that simply makes sense. We are optimistic that with our approach to sell such portfolios in smaller tranches over the next months and quarter, we will be successful, but as said, it takes longer than expected. This is a picture I think that you know not only from us, but also from other companies. Coming to page number five and looking at the highlights for Poland, revenues increased in the first nine months 2022 strongly in comparison to the previous year because we have now in 2022 Hoppegarten from the second quarter onwards in our P&L.
Please be aware that the fourth quarter will be by far the strongest as most handovers for the financial year 2022 are planned for the fourth quarter. Therefore, looking at the results from operation in Poland, which was around EUR 11 million for the first nine months, is just a smaller part of the total result that we expect for the full year. When you remember that the FFO II guidance stands around EUR 250 million, the total result operations Poland should be closer to EUR 60 million in total. For the full financial year 2022 as a result of expected strong handovers in the fourth quarter. We can tell you that here everything is on plan. Talking about more general in Poland, it's not only the case that the construction sites are running as planned.
We also see that on the construction price side, the inflation rates have clearly come down the next month and as a very positive expect sales numbers are picking up now again. What we saw in September and October as an average sales volume was between 200 and 220 apartments. That compares to numbers more around 150 apartments per month during summer. Therefore, the difficult market condition in Poland with high interest rates, high inflation now clearly leads to a reduced sales number. We see here an increasing trend, and it's not the case that sales numbers are coming down and down again. The business has not only stabilized, it shows clearly a positive and increasing development. Coming to the next slide where we show you our refinancing measures that we have already taken.
Starting with the first two points, that's something that you already know. We have completed the rights issue with total proceeds of EUR 22 million. We have taken this proceeds to repay part of the ROBYG acquisition bridge, which stands today at EUR 310 million. We will use the disposal proceeds that are already mentioned to repay an additional part of the bridge. The bridge should be at around EUR 250 million by year-end. We have also extended the bridge financing volume or the bridge maturity until January 2024. We've already indicated with the half year report that we're working on additional early refinancings of German bank loans. This is now nearly completed in full. Some signings of contracts are already missing, are still missing.
This is something that will happen basically in the next days. The closing of this early refinancing of bank loans will take place in November and in December at the latest. All interest rates are already fixed, and we expect an additional liquidity uplift of EUR 161 million. It's not only the case that we've extended all bank loans that originally mature in financial year 2023. The loan amount was EUR 160 million. On top of this, we get additional liquidity of around EUR 160 million because the LTV of these portfolios that we have now refinanced was quite low after 10 years of amortization of early growth.
Therefore, this is definitely a good sign that we are able to create additional liquidity with a banking market that is still very much intact in Germany. At the next point, we have already adjusted our CapEx plans in Poland in the course of the year. In summer, we decided to step all new residential for rent projects and of course, to continue with the existing projects. We said for now we concentrate on the residential for sale projects, which are not very capital intensive if they are financed to the very large part by customer pre-payments. That leads to the fact that the net financing needs for Poland in financial year 2023 are only at around EUR 50 million. What we see in the sig for sale business is very visible in terms of cash flow.
99% of all planned handovers for 2022 are clearly already sold. Into 2023, the pre-sale ratio today or at the end of the third quarter today, it is even higher, was already more than 60%. We have very good visibility on cash flow and results coming from Poland, not only for 2022, but also for 2023. I already mentioned the disposal program, which is now more extended into 2023 with an adjusted target size of around EUR 250 million after now the closing of the first disposals will happen in the fourth quarter. Some words about our decision to suspend the dividend for financial year 2022. We're talking here of an absolute amount of EUR 143 million.
That was the former dividend guidance. We said, well, in the current market situation, we have to accept that, A, talked about this investment markets are difficult. That B, financing markets when we talk about capital market financing, unsecured financing is extremely difficult. Therefore, we thought to be here clearly more on the conservative side, to have here every decision in our hands to tackle the upcoming refinancings in 2023. It's in this situation also in the interest of our shareholders, the best situation to suspend the dividend for financial year 2022. You can assume that this decision wasn't easy for us.
I mean, TAG has always paid an attractive and growing dividend over the last years, and we will of course, return to our dividend policy once this market situation is more on a positive way, once we have done all the refinancings, which is basically the bridge loan maturing at the beginning of 2024. For now, we think it's clearly an appropriate decision to suspend the dividend. If we turn to the next slide, you can also already see that with this decision and with the already completed bank refinancings, we have basically tackled all upcoming refinancing in financial year 2023. If you look in the maturity profile, we will see this later in the presentation, there are still refinancing needs until end of 2023 for EUR 492 million.
That is said, the bank loans are as far as they refer to German portfolio financings already refinanced or extended. We have additional liquidity of EUR 161 million from this refinancing. We are keeping the cash that we generate from the German business. We don't pay any dividend. We can use that to repay debt. In the simplified chart on page number seven, again, we are only talking about roughly EUR 70 million as remaining refinancing needs for the next more than 12 months. Of course, we have here further options, and we just give you two examples on the top right. Additional mortgage financing in Germany is something that works very well. Therefore, we have clearly as an example here, additional financing sources that we can use. Of course, we will continue with our disposal program as said.
Therefore, with this decision, which is on the one side hard for shareholders in the short term, mid to long term, this should be an appropriate way to maneuver in this market. Coming to page number eight and talking about our new FFO guidance for financial year 2023. We predict here a reduction in FFO I by 9% from the current midpoint guidance of EUR 190 million to now EUR 172 million. What are the reasons for this reduction? One main reason are planned higher interest rates. These high interest rates are coming, for example, from the fact that today's bank loan in the refinancing that I already discussed, are at around 4%.
We will use this to repay unsecured debt maturing in 2023, for example, from one promissory note, for example, from one corporate bond with coupons on average below 1%. On the other side, we have also penciled in the guidance in 2023, no disposals from these 2,500 units. We have penciled in, of course, the interest rates from the bridge financing from this 2,500 unit portfolio. Therefore, higher interest costs from the bridge, higher interest costs because of already completed refinancing. There are no really material refinancings ahead of us that should give us a good picture leads to a EUR 10 million increase in interest rates. You see marked with this small number one, asset disposal of EUR 2 million. These are already signed disposals.
Just to make this clear again, we have not incorporated any disposals in this guidance. If you incorporate that, if you ask us what is the effect if you sell these 2,500 units on FFO I after all interest costs, after taxes, this is EUR 6 billion roughly for the full year. In a simple example, if we would sell these 2,500 units in the middle of the year, we would have a EUR 3 million reduction. We of course see increased prices for maintenance. We see higher heating costs for our tenants. Therefore, we have taken into account an increased number of around EUR 8 million for this.
Roughly 50% of that EUR 4 million is for higher prices for maintenance work as a result of the current cost inflation, roughly 50%, another EUR 4 million, is something where we take into account, first of all, the new CO2 tax. That's an amount of around EUR 1.7 million. The remaining part, it's close to EUR 2.5 million, is something where we say, "Well, we need to plan at least higher impairments on receivables from our tenants because they will face increasing or strongly increasing heating costs." As of now, this is not really an issue, but we know that in 2023, we will have the service charge bills for 2022 and increased prepayments. Simply to be in a safe side, we have taken care of that.
It is a one-time drop by 9% in the FFO I, but looking into 2024 and 2025, worth to mention and important, we expect on this basis a stable FFO I level. Included in this guidance for the financial year 2024 and 2025 is the assumption that the 2,500 units are disposed. That's already a number after the disposals. What's the reason why we can keep the FFO I stable on the one side? Clearly, we still expect higher financing costs in our group, mainly coming from unsecured debt that's maturing or even from bank loans where we now have higher interest rates. We see a growing FFO for our business in Poland.
At the beginning of 2023, we will have already 2,000 residential units for rent on the market in Poland. In the middle of 2024, this will be around 4,000 units. Having in mind that the average per square meter rent in Poland is roughly double the number in Germany, this means that it is an equivalent of roughly 8,000 German assets that come now into our group and come now also into the FFO I. Therefore, 9% reduction FFO I mainly coming from increased financing costs and increased prices for maintenance and heating costs. That's the effect in 2023, but after that, a stable outlook for FFO I, leaving out any further acquisitions. Let's go perhaps a little bit quicker through the remaining financial slides on page 10.
I think the PNL development in the 3rd quarter of 2022 has not really any very material developments to comment. In general, numbers look, as said, very positive. Perhaps one comment on the valuation result, or the expected valuation result for the full year. As always, we are giving out here, official guidance, and we have so far not any numbers from our valuer for that. What we could expect or what do we expect for the full year? That's of course, difficult to predict as we see ourselves that investment market is very limited in size, that we don't see really a lot of transactions. By the way, we don't see any distressed sellers.
Perhaps it's a reasonable assumption, and maybe that's in line what you hear from other companies, that the value uplift that we had in the first half turns now into a value reduction in the same size in the second half. In the first half of 2022, we had a 4% increase. What we expect is a kind of base case, and please just take this as a rough guidance could be that this reverts in the second half. That means for the full year 2022, perhaps a flat valuation result is a good estimate as of today.
Page number 11 shows you more details on the EBITDA, where we saw an improved margin in the course of the year, shows also the FFO I for the full nine months 2022 in comparison to the previous year, which is another increase of 6%. Page number 12, quick look at the EPRA NTA calculation. The main result for the reduction, by 13% is a capital increase, which was as we issued shares, at EUR 6.90 then dilutive in terms of the EPRA NTA. Just to make clear, this was already the case from the very beginning. The ROBYG goodwill is already excluded from this EPRA NTA calculation from the very beginning, as this is a consequence of the EPRA NTA definition given by EPRA. Page number 13 shows the financing structure.
Here you see, and that's important to point out again, the maturity profile as it is on the 13th of December before the extension of the bank loans and before the additional liquidity from the bank loans and also before our decision to suspend the dividends. The more or less formal maturity profile and the, yeah, kind of pro forma maturity profile we just discussed. Looking into the next three years, we think it's fair to say there's one material refinancing to come. That's the EUR 310 million bridge loan, which will be reduced at around EUR 250 million by year-end.
Beside that, in 2023, where nearly everything is already done, in 2024 and 2025, there are not any major refinancing needs outside of mortgage-secured German bank loans, which you see in the dark blue color. As we have just shown and discussed, this market is still open. Therefore, once the bridge financing is completed, and we will be clearly able to refinance this in the next months, for 2023, 2024, 2025, there should not be anything in the maturity profile that leads to a big concern. Let me comment additionally on rating decisions.
You have seen that Moody's in October 2022, has downgraded us to non-investment grade to Ba1 with a stable outlook, and that Standard & Poor's confirmed our investment grade rating at BBB- and put the outlook from formerly stable now to negative. Clearly, for us, the decision of Moody's was disappointing. We thought, and I think we could clearly also show to the rating agency that we've done a lot. We have done the rights issue, we've extended the bridge loan. Rating agencies were also very well about our actions, about upcoming refinancings with our bank loans. Still, for example, Moody's decided on the back of expected negative market developments in Germany to downgrade us.
Clearly, this is, let me say it like this, frustrating as a company if you do a lot, if you really fight for your investment grade rating, on the other side, the market goes into a direction where the rating agency finally decides to downgrade you. We have to accept this. What's the consequence for this? If you look again into the maturity profile and all discussions that we already had, main refinancing source currently is definitely not unsecured debt. Therefore, for the short term, this is not really, how should I say, then a big issue for us that we received the Moody's downgrade. We still have investment grade rating at Standard & Poor's, and the outlook also turned into negative also on back of the market conditions.
Here, of course, we are much more optimistic to keep this investment grade rating. Investment grade ratings are for us more something for the mid to long term. Clearly, once we restart projects in Poland within the rent sector, unsecured financing is for us more on the table and therefore, clearly an investment grade rating is very helpful. This is realistically seeing nothing for 2023 and perhaps also in 2024. This is something that perhaps slowly starts again, but we simply need to postpone any decisions on further investments here. Moving on to page number 16, quick look on like-for-like rental growth. As I said, we are already above our guidance with 2.5% in the total like-for-like rental growth. You see also the composition of the rental growth on this slide.
That's without any effect from the modernization surcharge. It's really purely underlying rental growth coming from which bigger increases coming from tenant turnover and coming from vacancy reduction. The vacancy development is once again shown on page number 17. As I said, a very good development. After a slight increase in the first quarter, we are now down by 90 basis points within six months, and that should be definitely something positive. Some words about Poland. On page number 19, you see an overview of the portfolio. Just to reconfirm this again, we have a sizable land bank in Poland for the build to hold model, so for the rental apartments as well as for the build to sell apartments. It's up to us to decide when we start the projects. The potential is there, but it's not an obligation.
We will of course carefully manage our CapEx. You've already seen this with our decision to postpone any new residential for rent projects. The residential for rent portfolio still is around 540 units. As I already mentioned, this will now grow in the next quarters as more and more projects are completed. You see that we have 3,500 units under construction, so that's roughly 4,000 re-units in the rental portfolio that we will have finished by the middle of 2024. In roughly one and a half years. That's very visible. Page 20 shows you again an overview about our rental projects in Poland. The demand for this project is extremely strong, so the vacancy rate is basically down to a kind of minimum vacancy rate.
After the balance sheet date in October and November, we had an additional project that was finished from roughly 200 units. Here also the letting success is extremely strong. Rents that we see are in double-digit % above planned rents. Rent increases that we have now after the first year with existing tenants are also 10%-15% above the previous rent. Therefore, the demand for our product for the rental units we offer in Poland is still extremely strong. Page 22 shows the FFO II guidance for 2022. Once again, we confirm the guidance for FFO I as well as for FFO II. That should be both on a very good way. We already have discussed our thoughts behind the dividend suspension.
In our next slide, you see the guidance for 2023 that I've already elaborated on as far as the FFO I is concerned. Important to mention that we also of course publish an FFO II guidance, and that here the reduction compared to the FFO I is lower. It's just 3% in absolute amounts, and it means we expect for the next year, for 2023, an increased results from our operations in Poland, coming mainly from sales or from the sales business, as we will have more handovers in 2023 compared to 2022. Not only because ROBYG is now fully consolidated for the full year compared to just nine months in 2022.
We have here projects with higher sales prices, a good margin that will lead to an increased revenue and to an increased sales result. Therefore FFO II is broadly stable and in this market environment, we think this is definitely good news. A final comment on the dividend for financial year 2023. Today we, or yesterday evening, we announced that we will take a decision on the dividend for the financial year 2023, perhaps at year-end 2023 at the earliest. This will be dependent on market conditions and on the completions of our refinancings, which is basically the bridge loan that we have already discussed. We clearly return to our FFO I...
to our dividend policy of 75% of FFO I once market conditions are better, once we have completed the refinancings. In the current market environment, and please understand this, it's extremely difficult to predict when does this change. That's really not in our hands in full. Therefore we will come back with the dividend guidance on the financial year 2023 in some quarters. Clear, once again, the FFO I will be the basis for dividend distribution also in the future. Once the market conditions are better, we will also return to the former dividend policy. That's it from my side as an overview about the Q3 numbers and our decisions that we have taken regarding refinancings and the dividend policy. Now I'm of course very happy to take your questions.
Ladies and gentlemen, at this time, we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star followed by two. If you are using speaker equipment today, please lift the handset before making your selections. Anyone who has a question may press star followed by one at this time. One moment for the first question, please. Our first question is from Andres Toome of Green Street. Please go ahead.
Hi. Good morning. Firstly, I wanted to inquire about just the disposal progress, just to see where it stands when you're sort of thinking about early next year. What sort of buyers are in the bidding tents at the moment, and what sort of pricing discussions are you having insofar as the spread between the asking price that you're looking for and the bids that are coming through? Just to follow up on that as well, are you know, willing to go below, I guess, the last reported values, also just given that you're guiding to effectively a decline by year-end already?
Yeah. Good morning. Good morning, Andres. It's extremely to predict the progress on a disposal program. We had really processes in the past weeks and months where we were very close to signing and then very shortly before signing was scheduled or we even had an appointment at the notary, then the potential buyer simply stepped back. It was not a decision in the sense of that he tried to force us to reduce prices. Simply a lot of buyers and most buyers are currently waiting. Then they extend negotiations. We postpone the whole transaction. Even today we have, of course, disposals in the pipeline in the sense that there are due diligence processes, negotiations. It could also be the case that we can report something quite quickly, but in the meanwhile we're extremely careful on this.
There is activity. We see clearly interest in the portfolios itself, the problem is a little bit that everyone's waiting until we really see first transactions, I'm sure that confidence will get back to the market, more people will start to buy and so on. Talking about pricing, I mean, one needs to be realistic and to have successful disposals compared with the current book value, which is the book value at half year. I think one needs to give a discount, you know. If this is a discount of, let's say, 5% or 10% to the current book value, we think that is something worth looking into. We are not the company who's telling, well, the book value is the kind of minimum price that we want to achieve.
I mean, so far we have achieved it. If you remember at the beginning of the conference, I said that we have already sold 800 units, slightly above book value. I think in the current end market environment, that's not realistic. One needs to incentivize potential buyers. Just as a rough estimate, the discount perhaps of 5%-10% of the current book value is something that we expect as is something we need to give to have successful disposals. Finally, you ask about the potential buyer. Clearly we see more people with equity interested in our portfolios.
These are then perhaps people that buy in the first step in full out of cash or with a large portion of cash and are waiting for the refinancing and perhaps are not forced to finance that very or to refinance that very quickly. It's not really a complete new buyer group on the market. This trend is clearly there, and this also then leads to the fact that that's also how we set up the disposal program that perhaps selling in smaller portfolios, tackling or looking for such equity buyers is more successful than being with a large portfolio on the market.
Thank you. Then one question on the debt side also with the disposals. When you are disposing assets, are the buyers able to take on the mortgage debt you already had on these assets, or is that not possible and that they have to actually get a new facility for financing?
Well, in the current negotiations or in the disposal that we've completed, the financing was not taken on. In our contracts, in our bank contracts, I would say in nearly every case, the bank has the right to terminate the contract. If we as TAG sell the portfolio, then it's basically something the new buyer needs to negotiate with our bank or with his new bank.
Understood. Thank you. Maybe just understanding the Polish bonds as well. They're quite expensive, so I'm just wondering what sort of optionality you have there. Is there a way for you to sort of opt to not to refinance in the Polish market and maybe use disposal proceeds in Germany to pay that down or just take on more debt in the German side of the business?
That is an option that we have. The bonds issued by ROBYG have, I think, every quarter a chance to be repaid. At the moment there's still an interest rate protection in place. That means there are still interest rate swaps in place that we can use. Therefore the average financing costs in Poland are still at a, I would say, reasonable level. Yes, this option is there.
A final question about the Polish just business as it stands, maybe just understanding the build to rent side of things and how are you seeing the yield on cost evolving there because, you know, rental rates are spiking and you're sort of commenting that construction costs are now stabilizing or even going down. Is there a potential for that 7% to turn into 7.5% or something even above?
That's indeed the case. That's exactly what's currently happening. I mean, perhaps it's too early and the portfolio to have in the market is too small to say, "Well, this is the new level." Still, if we complete the projects, look at the first rents and the guidance or the number that we have guided to, the 7% yield on cost is true. Very quickly we see here strong rent increases in the current market situation. Therefore, yes, it's the case that the gross yields that we are seeing in the Polish rental project is perhaps higher than expected.
Thank you. That's it from my side.
Next question is from André Remke of Baader Bank.
Yeah, good morning. Thank you, Martin, for the presentation. A couple of questions from my side, starting with a kind of follow-up to the previous question on disposals. While you've acted so far very clear and straightforward in terms of capital needs, especially with the 20% highly dilutive cap hike, and the clear message to cut the dividend in full. In terms of disposal, it seems to me that all acting in the same direction currently, except the wait-and-see position. Yes, you would expect disposals at like a price 5%-10% below book value, why do you not accept even lower prices at this point in time and to lock in already now the cash gives you more freeway to act in general?
It seems to me that you and also other companies wait on lower prices, and book values that they should be confirmed in the 1st half of next year, or whenever, and then to accept these lower prices, because at least the direction of prices seems to be clear. It's a more aggressive point probably, but, what is your view on that?
Good morning, André . Perhaps you can understand that I don't want to comment too much on pricing thoughts as we have current negotiations, projects running. Perhaps let me answer more general. With today's decision on the dividend, as we've shown that we are willing really to do also hard debts, because we think that the current market environment requires such debts. If such situation would arise that we were able to have a significant disposal and get rid of upcoming refinancings and perhaps the discount is even a little bit higher than what I indicated to, definitely we would look into it. I'm carefully with guiding about any kind of pricing that would be acceptable.
At the moment, you are not really willing to accept lower prices. That's the, in a nutshell, the outcome.
I think the problem is different with the investment market. Everyone's really looking what is the exact pricing point. It's not the case that you have a process where, for example, you ask for a price of 100 and then the buyer says, "I'm just willing to pay 80." It's more the case that the buyer says, "Well, you agreed in the current process, perhaps to a preliminary price of 100," and then the potential buyer says, "I need more time. I will come back to you. For this interesting." For some weeks the process is on hold because buyers are of course, also uncertain what happens with prices, with interest rates and so on.
It's not really a decision at the moment, at least in the processes that we see that we have a chance or a complete offer to sell at a specific price and we say, "Well, but that's, I don't know, 5% too low, 10% too low." It's more a situation, and at one point in time we're convinced this will change. It's more a situation where everyone's waiting. Defining an exact pricing point, that is the pricing point where we see strongly increased data is very difficult. I think that's not only for us the situation, that's the situation in the whole market.
Okay. I get it. A second question on your bridge loan of EUR 310 million currently. Did I get it right that this will be reduced to EUR 50 million already at year-end? A specific question on the cost of debt. At the moment at 0.6%, when will be the next step up and to what level? For the remaining EUR 250 million. Would you be able to redeem the financing at any time and without any further cost or is it plus million?
We are planning to reduce the bridge loan to EUR 250 million. Why, why is that? I mean, we are basically incentivized to do this because if this is above that, another fee would be payable, and we think economically that makes sense to use part of the disposals, and that will get me now having in the next weeks the disposal proceeds to repay that. Then, as is typical for a bridge loan, each quarter the interest rate increase or the margin increase. That's a floating rate bridge loan. Please understand that I can't give you any very detailed numbers, but assume that today it's still below the cost of new debt financing in the mortgage secured towards the end of the bridge.
That means towards the end of 2023, this is something that is then very similar to interest rates that you see with our bank loans.
Mm-hmm. Mm-hmm. This is current, let's say 4%.
Yeah. Yeah. To give you a guidance, it's roughly that range.
Yeah. Mm-hmm. Okay. A last question, more technical question. From what point in time you will change your FFO calculation, not fully focused on German business, to include also the Polish business into the FFO I?
That is already the case for 2023. Andre, thank you for this question. Perhaps I should have mentioned that when presenting the guidance. A EUR 4 million contribution to the FFO I is already included in the 2023 guidance. We will report from 2023 onwards, in the sense that we split also the FFO I and make clear which part is coming from the German business and which part is coming from the Polish business. As said, in 2024, 2025, you should expect strong increases in this FFO I contribution from Poland as more and more apartments are then finished.
Mm-hmm. Okay. Excellent. That's from my side. Thank you very much, Martin.
Our next question is from Sander Bunck of Barclays. Please go ahead.
Hiya. Good morning, team. Thanks very much for that. A couple questions from my side as well. Can you talk a bit about your current cost of financing and how you're thinking about financing in bond market versus bank market versus secured? What are kind of the differences and how are you thinking about that going forward?
Yeah. Good morning, Sander. I would say the clear preference at the moment is for mortgage secured financing. I'm talking about the current cost of debt. We know this now very, very well from the recent refinancing. I would say margins currently around perhaps 100-120 basis points for a 10-year bank loan. On top of that, mid-swap rate, that brings you to a total coupon that's slightly below 4%. That's for secured debt. That's the preference. Talking about unsecured debt, honestly, a pricing for a new corporate bond is extremely difficult, as we have not really any outstanding benchmark corporate bonds. The two corporate bonds that we have issued in the past were private placements with a very small number of investments. Their pricing is not really representative.
That's a more realistic option that we have are additional promissory notes. Short term , they've issued a promissory note in June with a margin for five years of around 190 basis points. That would lead them, if we put a five-year mid-swap rate on top to a coupon slightly below 5%. I think more realistic is that today that the margin is closer to 250-300 basis points. That will bring us for a promissory note, perhaps somewhere a coupon of 5.5%-6%. Therefore, you can see this is not really a preferred way of financing for us, but perhaps something that we do additionally, but in smaller sizes.
Okay. That's very helpful. In terms of taking on more secured debt, how have you discussed that with rating agencies? Like, are they concerned about it? Obviously, there's quite a bit of layering going on in your debt book. Would you be happy to just keep on tapping the secured debt market, or is there kind of a limit that you have in your head, in terms of how much you would be willing to do?
No, there's not really a limit. I think also not from the rating agencies. Of course, for rating agency always the pool of unencumbered asset is good. We still have the complete Polish portfolio, which is unencumbered. So this is then now over time, really a significant part of our portfolio. And I think also for rating agencies, today liquidity, maturities, upcoming refinancings is more important than the unencumbered asset ratio. And basically, that's the reason why a pool of unencumbered assets is there to use that in a situation as we and other companies have it today, where unsecured financing is difficult or very expensive.
Okay. That's, that's very helpful. The other question I had was on the dividend cut. I was wondering that did you discuss it with rating agencies? If so, what was the response? If they did say anything about it, like, do you have a sense what it would take to come back to IG or in the case of S&P to back to a stable outlook?
Yeah. Perhaps to start with the second question. I think in the last S&P announcement from November, it was very clear that they expects a refinancing of the upcoming maturities from our side, and that refers then to 2023. I think that's to the very largest part already done. We have additionally the bridge loan maturity in 2024. Once this is done, I think there's a good chance, looking into the announcement for S&P that also the outlook changes again. That's the main issue. All other numbers like LTV, like net debt to EBITDA, like ICR are absolutely in the range that basically both rating agencies, including Moody's expect for an investment grade rating.
I mean, we have intensively discussed here with the supervising board, the dividend suspension for 2022. Rating agencies has been informed that we discussed it. Let me also clearly say that was not a decision that was driven from a requirement from the rating agency side. It was clearly a decision that we have taken and of course for a rating agency and I think for every creditor that's in more and more good news. This is helpful for the rating, but it was not the driving reason to put it like this behind the decision.
Okay. The dividend cut in isolation, you would not expect to have a positive impact on the rating?
I think that would be too, also too early. Knowing how rating agencies act, they don't want to change their decisions within two or three weeks. I think a realistic estimate is that we have now the negative outlook from S&P for some months. Especially once we have refinanced the bridge loan, I think there's a good chance that the outlook changes again to stable and of course in itself the decision for the dividend suspension is of course helpful.
Okay, great. Then the final one for me. Obviously there is a positive contribution from Poland into the FFO I over the next particularly in 2024, 2025. I was just wondering how much additional CapEx do you still need to spend on that? And does that drive additional disposals within Germany?
That's not so much. As I said that in the middle of 2024, the current projects, the current residential rent projects are finished. For 2023, the net financing needs for Poland are roughly EUR 50 million. That, by the way, breaks down into EUR 1 million gross investments for the rental business and EUR 50 million cash surplus on raw numbers from the disposal business. Perhaps there's another EUR 50 million needed for the first half of 2024. We're really talking here about, how should I say, the manageable amounts now. That's I think also important that to mention it once again. We have really adjusted our CapEx programs in Poland in the way that the Polish business is more and more a self-funding business.
Sorry, just to confirm, the net CapEx spend for the positive FFO contribution in 2024, 2025 is in total, in aggregate is around EUR 50 million?
That's the gross investment that we need to take in 2024 is a rough number to complete the residential for rent projects. Also in 2024, we will have cash inflow from disposals and perhaps a little bit early to predict the exact cash inflow that we will have in 2024. If we continue with the current decision to just finish the current residential rent project and not start anything new, already in 2024, Poland would be cash neutral or would even already deliver a cash surplus because then we have the rental portfolio fully on the market, we have disposals. That's very visible that the Polish business is not only self-funding, but it's really creating cash surpluses.
Okay. a self-funding, basically the cash to sell, the development to self-funding, the development to hold portfolio effectively.
Yeah.
Okay, fine. Okay. That's helpful. Thank you very much for that, Martin.
Our next question is from Thomas Rothäusler of Deutsche Bank. Please go ahead.
Hi. Morning, everybody. couple of questions maybe starting, coming back on the rating and specifically on Moody's rating. I think, it assumes the successful execution of your disposal schedule. by when do they expect this? I mean, is there a further downside risk if it won't happen?
Moody's has not set a specific date to that. It's clearly as we've communicated today and also in the past, our target to use net proceeds from disposals to repay the bridge loan. There are also other financing sources possible. Of course, today's decision or yesterday's decision to suspend the dividend helps us to preserve cash. As discussed, we have also the chance to raise additional mortgage secured debt. Perhaps not only in Germany, but perhaps also in Poland. Therefore, there's also clearly a plan B if really nothing is possible. We don't expect this, but if really nothing is possible in the investment market in Germany in 2023, and it's not the only source of repaying the bridge loan.
I think for both rating agencies, the most important question is that upcoming maturities are ticked. As discussed for 2023, basically everything is done or nearly everything is done. The only really upcoming material maturities in the beginning of 2024, the bridge loan. After that, coming back to what I said, in 2024 and 2025, maturities, material maturities are only coming from mortgage-secured bank loans in Germany, where the LTV is already very low. Perhaps have additional potential to create liquidity. Beside the bridge loan for the next three years, there's not really any larger maturity that should be a concern. I think that's also the view of the rating agency.
Okay, maybe coming back on just secured lending volume. I think it was EUR 260 million. Is it right it's not finally closed, this deal? Is there any risk it won't close or? Also on that, I mean, when did you initiate the negotiation with the banks? How would you would be the situation if you would start nowadays? Do you think there would be a quite different term on it than the roughly 4%?
No, I don't think so. we started this process more or less in connection with the rights issue. In summer, I mean, this process, and that's not unusual, it takes four years. Sorry, four years. four months, three months, something like that. Coming back to your question, EUR 260 million, these are several bank loans, it's not one large bank loans. I think we're talking here about five or six bank loans, out of which more than 50% is already signed. That's everything fixed. For the remaining part, the credit approvals are already there.
We have fixed all interests and costs. It should be a question of, yeah, days or very few weeks until we have here signing and closing that we don't expect here any delays. Otherwise, we would have not communicated that today.
Okay. Another question actually just to clarify on your 2023 earnings guidance. I mean, does it consider already the early refinancing of the debt maturities in 2024 and specifically the EUR 200 million, EUR 250 million bridge, which is open by then?
No. The 2023 guidance assumes that the 2,500 German assets that we want to sell are still in full in the company for the full year. That also assumes that the bridge financing is in place in full for the full year.
Mm-hmm.
As said, this 2,500 unit disposal package has an FFO contribution after interest rate interest cost for the bridge after taxes of roughly EUR 6 billion. If we would theoretically sell it at the 1st of July, then it would lead to a roughly EUR 3 million FFO I deduction or reduction for 2023.
Oh, okay. Okay. Maybe a last one on overall the financial situation, the leveraging options. As I understand, you have improved your situation with the dividend suspension and also the early refinancing. How do you consider potential headwinds from lower property values? I mean, what are your options to delever if we should, let's say, get a 10% cut maybe next year on property values? I mean, also maybe assuming disposals remaining difficult. Of course, dividend cuts are an option. How would you look at this?
Yeah. First of all, we have really done already steps, not only with the dividend cuts. Please also remember the rights issue that we've done in summer. I mean, if property values fall stronger than everyone expects, the question is, okay, what's the consequence? Most important thing are always covenants. Is it a concern that we're breaching covenants? For us, the most tight covenants are in the promissory notes. Around EUR 350 million is the total volume. Here the covenant is an LTV covenant of 60% at maximum, and an ICR of at least 1.8 x. We're really far away from that covenant. By the way, this LTV covenant is based on total assets in the balance sheet.
In a scenario, values could drop by nearly 40% until we breach that covenant. We have no corporate bonds with financial covenants outstanding. We have a convertible bond without financial covenants from the bank loans. All the covenants are on portfolio level. That's the most important things to look at. Secondly, I mean, Values would drop strongly, then of course, LTV increases, then at some point in time, the rating could come under pressure. In such a scenario, with strongly dropping property values, then we are really still in a crisis, which is that's even more heavy. Here we are already concentrating on mortgage secured financing, where the LTV on group level is not that relevant.
I mean, of course, if a company is very much exposed to the unsecured market, perhaps looking at financing or financing options, LTV rating is extremely important. We would have just to put it like this, simply more freedom now, but would come not under pressure to do any actions to deliver. Let me also state this very clearly, perhaps you've seen this in the press release already. We don't see here any need for any equity measure, any equity raise after our decisions. After the rights issue, after the dividend cut, I mean, we have really done strong and for our shareholders, I think also painful steps. There's not any need that we see for any equity measure.
Okay. Thank you.
Our next question is from Simon Stippig of Warburg Research. Please go ahead.
Hey, good morning. Thank you very much for taking my question. My first question would be in regard to the valuation effect, in Poland. On page 11 of your presentation, you're showing a valuation result, of negative EUR 16.5 million. To what refers that?
Good morning. I'm sorry. This was hard to understand. Can you repeat this once again?
Sure. Again. On the presentation slide 11, you're showing an evaluation result in Poland, of EUR 16.5 million.
Mm-hmm.
Could you just elaborate on that?
That's not a negative valuation result. Perhaps it's a little bit confusing here. On page 11, we're calculating what we call the result operation Poland. That starts from the net income from Poland and then deducts any valuation gains that are included. We had a EUR 16.5 million valuation gain in Poland in the first half or first nine months of 2022, which was coming from the Polish rental business. We see here valuation uplifts once we have finished projects.
Okay. That refers only to the residential to rent projects you're taking-?
Yeah.
on the balance sheet.
Yeah. Just for the investment properties which are then residential for rent projects.
Great. Then maybe your whole valuation of the residential for rent portfolio in Poland, to what amount that currently? What's the full value you have on balance sheet of the 545 units?
This is something at around, I think EUR 100 million. The valuation uplift for indeed something around perhaps I think slightly below 15% for the first half.
Okay. What you just said before, I'm just thinking forward 2024, the bridge loan comes due, the remaining part. If you have at the beginning of 2024, what would be your best guess of your full value? I know it's a bit forward-looking, far forward-looking, and with a lot of moving parts. Your full value or your portfolio value of your residential to rent portfolio in Poland, what would you expect it to be? What do you think you could take on in mortgage financing in Poland if you were to need it?
That's, indeed, we have also done such scenarios, we know that the total value of the rental portfolio once it is finished, that means that's not at the very beginning of 2024, but at the end of the second quarter 2024, should have a value of EUR 450 million-EUR 500 million, depending on valuation effects. Even in Poland, 50% LTV for such a portfolio should be and is realistic. There's also an additional potential refinancing on this asset that could lead in rough numbers to an additional cash inflow of around EUR 250 million.
I mean, they are already mortgaged right now, I guess. I mean, even your EUR 100 million in assets you have right now, they are already mortgaged. You wouldn't have.
No, that's.
an additional... Yeah.
That's not the case. That's fully unencumbered.
Okay.
financed currently via TAG shareholder loans.
Okay, great. Okay, that's, that's interesting. You would have an additional cash inflow capacity from that of, let's say, EUR 200 million in the beginning of 2024.
Mm-hmm.
I wonder, I mean, it makes it very likely that you would reinstate your dividend paid in 2024, for your financial year of 2023.
I mean, please understand that today we simply want to be careful. I mean, predicting dividend in the current market situation is extremely difficult. Once again, we will return to our former dividend policy. Whether this is already 2000 or for the financial year 2023, the case needs to be seen in, perhaps in the end of next year. Of course, if we're able to do refinancings as planned, if we're also able to do more disposals in Germany in the next months, if perhaps sales numbers in Poland pick up even more than in the previous weeks, then the likelihood that we return to a dividend payment even for the financial year 2023 very early is higher.
As of today, we simply put the dividend for the financial year 2023, under this statement that it really depends on the further development of the market.
Okay, great. Thank you. Maybe one more question regarding capital allocation also. There's a gap between your FFO I and FFO or FFO II, and you mentioned also that this is probably the part of the self-funding business going into Poland. Maybe, in 2024, or maybe also already in 2023 with your, what you just indicated with your financing needs, what are you trying or what are you intending to do or where do you intend to allocate your capital of the gap between FFO I and FFO II going forward beyond maybe 2023? I mean, there will still, I assume, some capital be left and you're obviously not, indicating to use that for dividend payout.
Are you thinking to allocate that capital solely into the development pipeline in Poland? Could you also think of, I mean, it's too early for now, but do you also think maybe to allocate in the future some part of that capital towards share buybacks? Just in respect to what shareholders had to live through, I would say, dividend cuts and equity capital increase at the market, huge discount to NTA. Is that something you are thinking about with the supervisory board or is it something you will need to direct into the Poland business?
There's no need to direct this into the Polish business. Perhaps I try to give a broader picture what's the view about future cash flows. Perhaps I can break that down quite simple. FFO I will always be the basis for the dividend in the future, not only coming from the German rental business, also from the Polish rental business, will be used as in the past 75% of that to pay the dividend. The difference of the 25% is there to finance the CapEx for the German portfolio. That's one side. It's correct, we create additional surplus, cash surplus from the build-to-sell business in Poland. Let's take a round number of currently EUR 50 million-EUR 60 million a year.
Perhaps this increases in the past term once the market is improving even further. As a kind of base case, that would be used to finance or as an equity part to build up the residential for rent portfolio in Poland. Perhaps EUR 50 million, EUR 60 million equity cash surplus from disposals. We get an additional valuation uplift. We get perhaps EUR 100 million a year of unsecured debt. That brings us to a total investment volume of EUR 200 million, which is then possible without increasing our LTV. Really a meaningful portfolio build-up could then possible, again, just from the existing cash flow with the help of some unsecured financing and without any new equity raise. That's the kind of, I would say, base case.
If the situation is really that still at that moment in time, share price is at current levels and we're trading with a heavy discount to the apparent EPRA NTA, yeah, of course, share buybacks are an option for us as well. We've done this in the past, it's some years back, but in 2014, we've done that in a very concentrated transaction. Today, that's not really something that we discuss as we think refinancing is still more important. Once we are or once we have done the refinancing, and again, I think it's very visible that we're close to that and we create these cash flows that are very visible too, that could be an option, but it's nothing I think for 2023.
Sure. That's totally clear. It was more referring to beyond the year 2024 and 2025. It's all clear. Thank you very much. Maybe in regard to your disposals, again, I just wonder where do you intend to sell and out of what brackets, or what portfolio clusters, you're, you have earmarked for the asset to sale or the net proceed of EUR 250 million remaining?
These are really different regions, so we are not selling, let's say, TAG specific portfolio in the sense that these are locations like our largest locations, like Gera or Gera. We're talking here about locations, just give you some examples, like Brandenburg, like Leipzig, also some locations in North Rhine-Westphalia, also Hamburg, also some secondary locations. We try to create packages where we really have the chance to get to as broad buyer potential as possible. It's not very much concentrated on one type of asset or one type of locations. That's not the case. The typical transaction size is perhaps more something of EUR 30 million-EUR 40 million.
That's also understood. If you're selling across a lot of different segments or you have earmarked a lot of different, a lot of units in different segments, can you speak about differences in valuation or difference in buyer's behavior? Some of them may be standing back more in some regions that are economically weaker or maybe in Hamburg, where the market should be more liquid and prices keep up a bit better. Can you give any comments in regards to valuation differences?
What I can give as a general comment is, and that what's interesting and also good for our strategy is that the higher yielding assets seem to be more easy to sell than the low yielding assets. That's a little bit contrary to what we've seen in the past, where a market like Hamburg, Berlin was of course extremely liquid, has seen a lot of demand. Now has seen, of course, a lot of peak compression in the past. Assets are in everyone's balance sheet. Perhaps at a sub-3% gross yield. Yeah. Perhaps you find an equity buyer, but also for this equity buyer, this year is then quite hard. If someone needs to finance that at a 4% interest rate, clearly that's really hard to justify.
That simply supports also our strategy and gives us the feeling that we're good positioned with high-yielding assets in a world of high interest rates. We're still able to earn a good cash flow. As we see simple thoughts in buyer's mind out there, if this is really representative needs to be seen. I think that's a kind of move that we currently see.
Okay, good. If I may, just one last one. You're not having a lot of turnover in your portfolio currently, except of maybe some of the disposals. your best guess of your structural vacancy within the portfolio, what would you think? Is it between 3% and 3.5%?
I think that's a fair estimate. Always difficult to predict something like that, but it should be a good estimate. What we observe, I mean, also CBRE or the valuers are doing estimation for the structure vacancy rate, is that over the last years, also the assumption for such structure vacancy rates have come down. Perhaps looking into annual reports five years back, it's more around 4%. Test today is more around 2%.
Okay, great. Thank you very much.
Our next question is from Manuel Martin of ODDO BHF. Please go ahead.
Hi. Thank you for taking my questions. Just a quick follow-up on on the vacancy rate and your rental growth. How do you see your rental growth going forward for the next two years? I mean, in view of the energy situation, that could be a bit more tricky to increase rent. Is 2.5% going forward a fair assumption? Connected with that, do you think you could further reduce the vacancy rate of your portfolio towards the structured vacancy rate? And combined with that, what does it mean to your investment in the portfolio to try to reduce your investment?
Yeah. Perhaps to give you a little bit more background on our assumptions for this midterm outlook that we've given today for the FFO I for 2024 and 2025, where we said, well, in the current portfolio after the disposal of the 2,500 assets, that should be stable. There's also an assumption for rental growth behind it. We simply assume that the rental growth 2024 and 2025 is unchanged to what we expect for 2023, where the guidance is between 2.5% and 2.5%. On one side, this is perhaps conservative. If we see clearly in the market, increasing demand for affordable housing. On the other side, you're completely right.
One needs to take into account that tenants simply have to pay higher service charges and that perhaps affordability is more difficult in the next one or two years, at least as long as we have this energy crisis. Therefore, it's perhaps a fair estimate and perhaps a little bit conservative estimate to expect rental growth on a similar level for next two-three years. Long term, I think the market dynamics are even stronger.
Okay. For investments, are you ready to lower the investments in your portfolio, or do you think it's a level which is sustainable for the company?
For now we will continue with our ongoing investments in the German portfolio, which have been very targeted for years. You know that we have not started any huge investment programs in the past because we own a very well-maintained portfolio. We will of course invest a little bit more when it comes to our decarbonization targets, but that's still an absolute amount, I would say a reasonable amount. The CapEx strategy is unchanged. I mean, if needed, if the whole market turns even worse, then of course we would have the potential to reduce CapEx and to postpone new investments. For now, that's not planned. Again, it's still not material.
Jesse, last question from my side. Sorry, the line was somehow too bad, acoustic problems. Your FFO I guidance for 2023, is that based on an unchanged portfolio or does that include the disposal of the 2,500 units? Probably choose for next please.
No, no. Happy to make this clear once again. That's based on an unchanged portfolio. The outlook that is given for 2024 and 2025 assumes a portfolio reduction by 2,500 units. Not for 2023, but just for this midterm outlook.
Okay, great. Thank you very much.
Thank you. Our last question is from [inaudible] Please go ahead.
Can you hear me?
Yeah, good morning.
Good morning, Martin. Can you hear me?
Yeah, we can hear you.
Yeah. Sorry . Yeah, just two more questions on my side. Can you give a bit more colors on the your pre-sales on your Poland portfolio? It's a 60%. What do you expect for 2023? What is the increase of interest rates effect on buyers? Like, can you give some, I mean, more detail on that? Second question on the goodwill on ROBYG. Can you expect another decrease? I mean, what is the value in your balance sheet now? Can you give us some colors on that, please?
Clearly, Paul, happy to do this. First of all, indeed, the pre-sale ratio for the 2023 handovers is already or was at the end of the third quarter above 60%. That's also compared to previous years, a good ratio. Therefore, we have a good visibility on that. What we expect for financial year 2023 is that we sell at least roughly 2,700 apartments in Poland. Compared to this year, taking full year numbers into account, that's a slight increase. That compares to a number of more than 4,500 units for ROBYG and for Vantage in total in 2021.
You see the guidance for 2023 still takes into account that sales levels are reduced in Poland, but on a good level. Compared with the years 2018, 2019, that's how should I say, the typical sales level, these 2,700 units. And why is that sales number reduced in currently compared to previous year? That's simply because mortgage rates in Poland have increased strongly. For a buyer today, perhaps a mortgage rate is at 8%, 9% or even 10%. And on top of that, the regulation requires that banks take into account when granting a loan an additional 500 basis points and step up. The credit worthiness check is then even 500 basis points higher.
A simple example, if the rate would be 10%, bank needs to check whether the client is also potentially or can potentially pay even 15%. That leads them to the fact that currently 80%-85% of our customers in Poland are cash buyers. These cash buyers has always been there and are, as said today, the largest group of buyers. Still, we are able to sell this 2,500-2,700 units. Once perhaps the regulation in Poland is not that tight anymore, once perhaps interest rates in Poland comes down, perhaps even just slightly, we are very optimistic that the sales numbers will increase quite strongly.
Okay, thank you. On the goodwill?
Sorry. Yeah. The goodwill is around EUR 250 million for the total Polish business. Last part of that is ROBYG. It's excluded in the NTA calculation. It's of course also not included in LTV calculations or in FFO definitions. This would be if we have an impairment, a pure impact on IFRS numbers and not on our key metrics. It has not been impaired so far. We will have of course the impairment test now with the full year numbers together with our auditor. Is there a risk that we see an impairment? I think that's fair that the risk is there simply because of the increased interest rates. Yeah, we need to take or to make here a model where we have of course future cash flows.
Perhaps these cash flows are unchanged compared to the acquisition process or even a little bit better than originally expected. What we have to apply are interest rates based on Polish market conditions. Therefore, as interest rates have increased here strongly in the past quarters, the also discount rates will increase and that yeah could lead to a risk that we do an impairment on the ROBYG goodwill or on the Polish goodwill. Again, that would have not any, have any consequences on our key metrics.
So sorry, what is the total amount of goodwill which is still on your balance sheet?
Yeah. I can give you the exact amount. You see this also in the NTA bridge on page number 12. That's EUR 252 million.
Okay. Okay. Thank you.
Yeah. Many thanks, Paul.
There are no further questions at this time. Back to Martin Thiel for closing comments.
Yeah, many thanks, all for your detailed and many questions. Happy, of course, to answer further questions. Please feel free to contact Dominic from our IR department or myself. Thank you for listening to the call, and talk soon again.
Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you for joining, and have a pleasant day.