Earnings Call: Q3 2020

Nov 12, 2020

Ladies and gentlemen, welcome to TAG Immobilen Publications of Interim Report Quarter three twenty twenty. We have Mr. Martin Thiel, CFO of TAG Immobilen. Without further ado, I will now hand the call over to Mr. Martin Thiel. The floor is yours, sir. Yes. Thank you very much, and good afternoon, everybody. And thanks for joining the call today, the call at a little bit unusual time later in the day as we had several announcements from companies in the morning, we thought it's perhaps a good idea to do this a little bit later to give you time to listen perhaps to more than just our call. So thanks again for dialing in. And yeah, today, Q3 numbers, looking at these numbers and summarizing the business development of third quarter, I think the stable business that we had over the course of the year simply continued. I think so far we had really a good year. This is also the reason perhaps you've seen this already why it could increase now the guidance for 2020, slightly. Still just very small effects impacts negative impacts from COVID-nineteen pandemic on our business that should also be good news. We will report today on our activities in Poland to give you an update how far we are with our plans to build up the residential foreign pipeline. And we will publish or have published today, we'll explain it to you during this call, the FFO and dividend guidance for the financial year 2021. But let's start with a comprehensive overview on page number four, that's the highlights slide. And to pick out some numbers, first of all, positive development in the vacancy rate during the third quarter. So we were able to reduce the vacancy rate by 30 basis points quarter on quarter from 5.1% now to 4.8% at the end of the third quarter in September. Like for like rental growth, unchanged, still at 1.5%, including the effects from vacancy reduction, 1.4% excluding effects from vacancy reduction. FFO I basically stable and unchanged, 44,600,000 in the third quarter compared to 44,500,000 in the previous quarter. The upper MTA just just showed a smaller change, a small increase to 20.76 or more or less remained stable with the previous quarter. A slight increase in LTV that was not unexpected because, you can remember that we repurchased part of an outstanding convertible bond in August, and this liability management transaction more or less was the reason for the increase in the LTV by 80 basis points. So that's roughly in line with our LTV target of approximately 45% at year end. We clearly expect an LTV that should be around 45 or even below 45%. I will comment on the guidance, later, of course, in more detail. Just to give an overview, we increased the guidance for the financial year 2020 slightly on a comparison year on year. So new guidance 2020 with the actual results for 2019. We can now or we expect an increase by 7% on an FFO on an absolute basis, on a per share basis, and as well we are guiding for dividend increase by 7%. The new guidance for the financial year 2021 shows a 5% increase on the FFO and absolute terms also on a per share basis and also we expect the dividend to grow by 5%. Looking at acquisitions and disposals in our German business, we had smaller acquisitions in the third quarter, 120 units. So the total acquisition volume for the financial year 2020 now adds up exactly to 4,338 units. And also there have been some smaller disposals, 110 units approximately in the third quarter, and that's up it adds up to 320 units disposed so far in the financial year in 02/2020. Coming to the next slide and looking more detailed at the COVID nineteen pandemic impact on our business, I mean, the first topics that we hit here are more or less unchanged. You know them. I mean, we had this voluntary waiver on rent increases until June 2020. Since July 2020, we are increasing the rents again. And so we've come back to a kind of normal business, this has not the effect or had not the effect that from the 07/01/2020, every rent decrease was effective or was sent out, but we will expect here rent increases and a stronger rental growth, especially now in the fourth quarter. Vacancy rates, yeah, year on year or since the beginning of the year is stable, and as I said, even reduced in the third quarter. Still just very little impact on rent payments, so that's definitely important. The cash flow is virtually unaffected by the COVID nineteen pandemic. Positive development in business on our business in Poland as well. So all the construction sites are still running even today. No delays so far. We've been able to acquire further land banks and projects. So the total investments, the total units that we have secured or that are already under construction now add up to more than 7,600 units. And in the third quarter, we acquired land banks and projects for eighteen forty five units in three locations in Wartslav, Poznan, and in Lodz. Also, sales numbers in Poland picked up in the third quarter twenty twenty. Perhaps you remember that we reported a quite strong reduction in the second quarter twenty twenty due to the COVID-nineteen pandemic, but as expected, this was just a temporary effect. So the sales numbers in the third quarter nearly doubled to 124 units, and that's exactly the number that we expected at the beginning of the year when we did our internal budget. Sales prices remained stable all over the time or even slightly increased in the first month of the financial year 02/2020. I'm now on page number seven and some more detailed comments on the development and income statement in the in the third quarter. Comparing the first nine months 2020 with the first nine months 2019 and looking at net rental income, this number increased by 4,990,000.00. There was the increase in the net rental income, mainly driven by a higher net actual rent at 4,000,000 and lower ancillary cost of vacant real estate over this time. In the third quarter, now we had a reduction of our net rental income by 2,300,000.0, but please don't consider this as a kind of trend from quarter to quarter. Some costs like, for example, maintenance or also like service charges costs, have a certain swing depending on the fact whether we do more service charges or not, whether we do more investments or not. So that should be definitely not a trend, but in the third quarter, therefore, a smaller reduction by 2,300,000.0. Looking at the net income from sales, I think that's also important to point out. You see a number of 2,600,000.0 that's more or less purely coming from our business in Poland. But this 2,600,000.0 net income, don't be confused, is a number after effects from the purchase price allocation that we did under IFRS in our consolidated segments. If you exclude these effects and really look more at a cash number, this number is 4,900,000.0 higher. So in the third quarter, 2.6 plus 4,900,000.0, so 7,500,000.0 was more or less the net cash effect from the sales in Poland on our P and L. Looking at the valuation results, as always in the third quarter more or less no valuation results, so just a very small impact. As always we're doing the next full portfolio evaluation with the help of CBRE at year end, so we will publish that with the fourth quarter, results. And clearly we are already in discussions and we know at least perhaps a certain trend where you should expect the full year valuation result to come out. Please be aware, this is not an official guidance, but looking at our first half results, we had a 3.3 valuation gain, so 3.3%, sorry, valuation gain in our P and L, you should expect something similar in that direction. So percentage wise, the number is a little bit smaller, but in absolute terms perhaps, something very, very similar that trend or as a first rough estimate for the full evaluation result. So that means more or less we don't expect here any change in the positive trend that we had in the past. And we also see that in our markets, in our business. And if if you look what our acquisition department today has on the table from the COVID nineteen pandemic, they're simply seeing not any pressure on prices, and I think that's something that you know from other peers and what is true for the whole sector. Looking at other operating expenses, they are unusual high in this third quarter, but that's to the very largest part the result of a one f effect. We founded in the third quarter a new foundation, here I gave Mitte Nanderschiftung, who was, or that was established to invest in social projects in our our TEG regions. And we've done this already in the past, but we thought especially now after the development that we had in the past months, as a result of the COVID-nineteen pandemic, we want to structure that, we want to increase our social projects, and therefore, we founded this TAG foundation. We will report on the foundation more in detail with our sustainability report. It is 3,600,000.0. That's a kind of, yeah, capital this foundation needs to to do this social project. But that's, as I said, just a one off and a one off or a one time payment. The net financial results mainly decreased quarter on quarter by nearly 75,000,000 due to the fair valuation of the older convertible bond 02/2022. So that's a non cash effect. Looking at the income tax result, the income taxes in Germany for the first nine months have been from our point of view quite low with 3,900,000.0, very helpful. And what led to an income tax reduction in the third quarter was the repurchasing of the convertible bond or the partial repurchasing of the convertible bond 02/2017, 02/2022, that we repaid in cash, and that led to higher tax losses. So over the next three years, including 2020 and including 2021, 2022, we expect a total income tax saving of up to 10,000,000,000 from this transaction. Looking at page number eight, you see the development of the EBITDA, the FFO, and the AFFO. Looking at the EBITDA margin in the first months twenty twenty, you see that it increased over time, so we are now at nearly 70% compared to approximately 68% in the first nine months 2019, as I said, in line with the reduced EBITDA in the third quarter, which is again a trend reduction in the EBITDA margin compared to the previous quarter. But the more accurate picture can be taken from the first nine months 2020 where we see the increase in the EBITDA margin. FFO I, more or less in line with the previous quarter here, clearly we benefited from the positive cash tax effect that I already mentioned from the partial repurchase of the outstanding convertible bonds. The result from the operations in Poland purely contributes to FFO two. So as of today, and this will be also the case for the very largest part of 2021, the business in Poland is more or less purely a sales business. So we're handing over apartments that have already been sold in the past, and the first rental project will start towards the end of twenty twenty one. The result from operations in Poland in the first nine months was 2,500,000.0. On the right side of page number eight, you see the details on this calculation. For the full year, you noted from the guidance, we expect a result between 10,000,000 and 11,000,000 coming from this proposal. Looking at the balance sheet on page number nine, you see a quite strong cash position of more than $500,000,000 at the September 2020. This is before payments of acquisitions in an amount of around $140,000,000 in October. So the very largest part acquisitions closed in October. We paged the purchase price, so that means in October after the balance sheet date, this cash position was reduced by roughly 140,000,000. And of course, the strong cash position was the result of the issuance of a new convertible bond that we did in August 2020 with a volume of $470,000,000 We also issued a smaller promissory note in July 2020 of $92,000,000 And I already mentioned that we repurchased an outstanding accrued bond partially. That was a total investment of nearly 190,000,000, and these increases or these issuances of financial debt was also reason why you see here an increase in the noncurrent liabilities. Page number 10 shows the EPRA NTA calculations. Comparing that with the number at the beginning of the year, you see a 3% increase. If you exclude a dividend payment of 82¢, the increase is 7%. And please be aware that this APRA NTA calculation is with the deduction of full transaction costs. So just to compare that, that's with other calculations that you see, if you would exclude transaction costs, then the EPRA NTA per share per share would be nearly €3 per share higher. You see this in this footnote on page number 10. Page number 11 shows the finance instruction. The average maturity of the total financial debt stands now at six point seven years. The average interest rate on the total financial debt is now down to 1.5%. Of course, the issuance of the new convertible bond with a coupon of just 0.6 helped to reduce this average interest rate of the total financial debt financial debt. Still, there's refinancing potential next years. 383,000,000 of bank loans are maturing. All the interest terms are ending in the next, up to three years, and the average coupon of these bank loans is 2.1%. We are currently refinancing bank loans for ten year maturities below 1% in most cases, so there should be clearly further interest cost savings in the future possible. On page number 13, you see the overview or the main data on our German portfolio. In this case, the quarter on quarter number of units is nearly unchanged, 85,000. As I said, the closing of the largest part of all our acquisitions happened in October. So beginning with October, the number of units is increased by approximately 3,500 units. Page number 14 shows the development on the like for like rental growth and CapEx in the third quarter and on a like for like basis. The like for like rental growth is at 1.5%. I already mentioned that at the beginning, so that's more or less unchanged compared to the previous quarter. And you know also from the last call that we tried to identify to make clear the corona impact on our rental growth from our voluntary waiver of rent increases from reduced tenant turnover and also from lower vacancy reduction than we had in previous quarters. Quarters. Still we stick to our guidance on like for like rental growth, which should be above 2% for 2020. 2% to 2.5% is the official guidance, so that's still the case. Let me confirm the guidance and we expect further rental growth in the fourth quarter. Maintenance and CapEx development, there are no really new developments here. We have slightly increased the total investments, see this in top right on page number 14 to €21.8 on an annualized basis compared to 20.4 on an annualized basis or on a full year basis in 2019, so not really a major change in maintenance and capital spending. And also the regions where we invest the largest part of our money are unchanged, which is Berlin, in our case the the Kutubaz around Berlin, and the Canada region. Page number 15 shows the development of our vacancy rates in the portfolio, and here we're happy to show a reduction by 30 basis points in the third quarter of twenty twenty. For the full year 2020, that means for first quarter, we expect similar development of the vacancy rate, and that means if we achieve a similar vacancy rate reduction like in this quarter, also in the fourth quarter, then we are already at our targeted rental growth sorry, at our targeted vacancy rate of 4.5%, and perhaps we're even able to reduce it a little bit further. So that means in case of vacancy rate reduction, be more or less back on track after the difficult months of the COVID nineteen pandemic earlier this year. Page number 17 shows in a summary the acquisitions year to date. As I said, just small acquisitions in the third quarter, but generally we're of course very happy Year to date in 2020, more than 4,300 units at a nearly 7% gross yield in regions where we already are with an average vacancy rate of 21%. Convinced that we can reduce the vacancy rate over the coming years only. So that should be something very positive for the future. Page number 19 shows an overview of the current and planned projects of our business in Poland. Looking at the current projects in the meanwhile, we have a total number of units, so that means land points or projects already under construction of 7,600, out of which more than 4,000 are designated as built to hold projects and 3,500 units are designated as built to sell projects. If you add on top of that planned project, and planned projects really means projects where we are in processes of looking closer at them, perhaps already in divisions processes and in negotiations, This number will increase. So you see here on the left part of page number 19 a rough estimate of 9,900 units in total and the build to the whole project, and that would exactly tie in to our target of 8,000 to 10,000 resifuran units in the midterm in Poland. Three locations we have entered in the meanwhile, Watslas, that was the starting point, Poznan as the second location, Lodz as the third location. You should expect that in the fourth quarter we can also publish that we have entered a fourth location. Here we can deliver and publish some details hopefully now with the full year results next year in March. And then finally on slides twenty one and twenty two, the guidance for financial year 2020 and financial year 02/2021. So we increased the guidance of regarding the FFO, the FFO per share, and the dividend per share a little bit to 170 to 173,000,000 in absolute terms and to €1.17 per share. And regarding the FFO, it was 88¢ per share looking when looking at the dividend. That's a 7% increase compared to the previous year. And, again, the 7% increase is not only realized on absolute amount, it's also realized or will be realized on a per share basis. On page number 22, you see the new guidance for the financial year 2021 regarding here for a 5% increase, again, on an absolute amount and on a per share basis. This also is true for the dividend. This guidance is based on the current portfolio, including all the acquisitions that we have signed until October 2020, so everything that you see today in presentation. For purpose of the guidance, no further acquisitions or disposals in the next weeks or in the coming year are assumed. But of course, we are working on that. But please be aware that it's on the existing portfolio. Anti FFO guidance 2021 basically purely refers to the German renting business as we expect from our renting activities in Poland that the contribution to FFO one will be not really material. So this in the midpoint 118,000,000 FFO for which we're guiding is basically coming purely from our German business. Page 23 shows in more detail the FFO, the expected FFO development between new guidance 2020 where the midpoint is 171,500,000.0 and the midpoint of the new guidance of 180,000,000 in the sea. The main impact is coming from an increase in net actual rent by more than 40,000,000. We are expecting for 2021 a like for like rental growth including vacancy reduction of around 2%. And the remaining 2.5% of the total growth in net actual rent will be from acquisitions and disposals in 2020 that will then contribute in 2021 for the first time for a full year. We also expect some higher expenses from property management, but that's not really a change in structure or a change in maintenance policy or whatever. That's more or less the result of, an increased portfolio size in 02/2021. Beside this, the cost base is broadly stable. This also refers to financing costs, and we have not, well, we don't expect lower financing costs on an absolute amount in 2021 as the total debt as a result of our investments this year is higher than in 2020. But with the lower interest rate that we achieved through our refinancings in the course of the year, we were able to keep the financing costs stable. And this is also true for the taxes. So despite the fact that we expect a higher profit not only under IFRS but also under under under tax law, we're able to keep that more or less stable. Also here, very helpful was the effect from the partial repurchase of the outstanding convertible bond 02/2022. Yeah. That's it from from our side as an overview of the developments in the February and about and our comments here on this, the increased guidance for the financial year 2020, the new guidance for the financial year 2021. And of course, now we are very happy to take your questions. Thank you very much, mister Martin Thiel. Now we will begin the question and answer session. To ask a question, please press 01 on your telephone keypad. Please press 01 on your keypad, and you will be placed in the queue. Yes. The first question we have is from Mr. Thomas Newhall from Kepler. You may ask your question. Thank you very much for the presentation and taking my questions. I actually only have two questions. The first one is on the likely ramp up of the Polish build to hold portfolio. You mentioned that there will be only immaturely effect in 2021. Can you provide us with more details how 2022 and 2023 and 2024 could look like in terms of ramp up of the build to hold portfolio? And then just minor question on the guidance, Page 23, you mentioned that you modeled in 2% total like for like rental growth, including vacancy reduction. If you would split this 2% between like for like rental growth and vacancy reductions, what would be the figures here? Thank you. Yeah. Thank you, Thomas, the questions. I'll start with the second question. So it's correct, it's a 2%, the rough number, like for like rental growth that we expect, out of which is approximately 30 basis points, so approximately 0.3 percentage point vacancy reduction. And that means that we expect approximately 1.7% from like for like rental growth without vacancy reduction. And this 1.7% is then purely a like for like rental growth coming from regular rent increases for existing tenants and from rent increases in case of tenant changes so that without any modernization CapEx or without any effects from larger modernization work for existing tenants. Mhmm. And we still take that. Looking at the portfolio in Poland, and as you know from our previous presentations, and we will update with the company presentation that we will publish in the course of the day that we are already guiding for the development of the units to hold. And you will see that the total number of units in the renting business at year end twenty twenty twenty one will be still not that significant. We expect around 500 units. But then year by year, that will increase. And at the end of 02/2023, we expect that something around 5,000 units in our portfolio are also designated or also ready to be rented out. And the full impact from the renting business in Poland, that means the point in time when we have reached eight to 10,000 ready for end units will then be in the end or in the course of financial year 02/2025. So Poland is definitely a midterm business and more or less the FFO 02/2021. And also to a larger part, the FFO 2022 will see just smaller contributions from the renting business in Poland. But since or beginning with the financial year 2023 and then quite strong 02/2024, 02/2025, you would clearly see very positive effects from the business in in Poland in our FFO one as well. And until that date, I mean, we still have the cash flows from the disposal business. Just to to make make it clear once again, for 02/2020, we expect here a number of around 10,000,000, from disposals, so net cash proceeds from disposals. And for 2021 and the following years, we expect, of course, also further net cash proceeds. By the way, we will publish the guidance for the disposal results in Poland next year together together with the annual report in March next year. Okay. Thank you very much. Thank you very much. Next, we have Kai Klose from Berenberg. The floor is yours. Yes. Hello. Good afternoon. I've got three questions, if I may. The first one is regarding Page 14, where you show the corona impact on rental growth. Just to understand how we should read that. And if we hadn't had corona, is then right to assume that the vacancy reduction in Q3 would have been around 60 bps compared to 30 bps, what achieved? Second question would be on the income statement on Page seven on the chart, this income statement on Page seven, I didn't understand completely the comment on the net income from services, why there was this increase. Maybe you could elaborate a bit on that. And also on that page, just to understand the increase in other expenses, which you mentioned, is coming from the personal expenses in Poland, just to understand where the salaries for the Poland employees booked. Is it in personal expenses and or in other expenses? And the last one would be on page on the FFO bridge on page 24. The increase in the person the increase in personal expenses, do you expect in the next year? How is it coming from from Poland or is it other reasons behind? Yeah, thank you for the questions, Kai. I'll start perhaps with the last question. The increase in personnel expenses that you expect is purely from salary increases that we pensive into our forecast, and we expect that on average, and that means for the largest part our employees are here in in Germany, the salaries will increase at around 3%. I mean, we would have also some efficiency gains in this regard, but that's definitely not an increased headcount. It's even a little bit slower, but it's on average 3% increase in salary that we take here into account, and that leads to the higher personnel expenses. And, yeah, of course, it's it's it's correct if you ask what about what is this 30 basis point reduction or let's say this 30 basis point impact that we show here here on the like for like rental growth, the corona impact, this 30 basis point is the number that we are behind our plan. So behind this assumption, there's a very simple thought that due to the COVID nineteen pandemic, we were not able for several weeks to proceed with a vacancy reduction as we have been used to in the previous months. And so therefore, looking into our plan, the vacancy rate would be normally 30 basis points lower. And therefore, we pencil in or we try to give you an understanding, well, what is the impact on like product revenue growth from a low vacancy reduction expected. And I think the last quarter, I mean, the third quarter twenty twenty shows that we are already back on a, let's say, normal mode. And also for the fourth quarter, you should expect, perhaps similar, perhaps even stronger vacancy reduction, compared with the with the third quarter. So that's the background of this 30 basis points. And looking in the the income statement, you asked for the personal expenses from the business in Poland. That's completely included in the personal expenses. And personal expenses are really everything. So whether people are in Poland or in Germany, whether they are on the caretaker service or whether they work in the asset management, there's also in in there's everything in personal expenses. In the net of other operating income, I think that was your question, here is the effect of capitalizing some of the personnel costs in Poland because then this personnel costs, and in this case, this was the 1,600,000, refer to people who are directly working in the construction business. And as we would do it with external costs, also this internal costs then are capitalized. So it's, let's say, cross presentations of full personal costs are in the personal expenses. And if we capitalize some of these costs because they refer, for example, to for the construction work, then it's shown in this case in other operating income. Thank you very much. And on the slight reduction in the income from services, you mentioned there's a footnote saying billing volume for energy services. Yeah. Service business is also to the energy business that we have service charges that we hear are not service charges, services that we're doing to the tenants that are then part of the service charges. And if we do hear more billings for service charges in one quarter, then from time to time, the income is higher than in the than following quarter. So that means in the February, we had, if a one, so a slightly positive one off effect. And in the third quarter, we had then a kind of normal volume in service charters that, for example, contain also our energy business compared to the previous quarter. And that led in this case to a slight reduction of €600,000 quarter on quarter in net income from services. So I think in this net income from services, perhaps it's really the better view to look at that on a year on year basis, and there you see the increase from 15,800,000.0 to 19,000,000. That's often more, let's say, the true picture than looking at that quarter on quarter. Sure. Anything. And the last question I have is, again, on 14, where you show the regional split of the amount of maintenance CapEx spent for the nine months, which was primarily on Bromnen and Candlest. Would you or could we expect that there will be in those two regions also in 2021, is a focus on investments? Or are you projects in other regions or special projects in other regions, the location of the investment volume might be somewhat different compared to this year? No. This this should be more or less unchanged, especially the Berlin region. And in in in the Berlin region, more specifically, Brandenburg and a half as a location that's clearly, let's say, focus our CapEx programs also for the financial year 2021. Great. Thanks so much indeed. Thank you very much. Next, we have Mr. Andreas Tomy from Greasery Adviser. The floor is yours. Hi, good afternoon. I was hoping maybe you can speak to what are you seeing in terms of market rents in your locations? And in which locations are you underwriting the highest look forward rent growth? Well, looking at the different regions, would say where we especially see strong rent growth is, first of all, the region around Berlin. So in our company, it's, of course, called the Berlin region, but you know that these are the nearly commuter belts around Berlin. That these are locations like Brandenburg and Haffen, like Stauffsberg, and like Nauen where we have seen over the past years and also see today here quite quite strong rental growth. Then definitely cities like Leipzig and cities like Dresden are quite strong. And we see still, a very sound underlying like product rental growth around, let's say, 2% even without any CapEx programs in other medium sized cities in East Germany where we are in. And I would say in our portfolio, it's not the case that we have extremely strong locations where we have, let's say, double or triple the rental growth compared to other locations, it's it's often quite close together. So a like for like rental growth without CapEx, without vacancy reduction of 1.5 to 2% is something that midterm on a midterm basis, I think, refers to nearly Okay. And then a follow-up, maybe alluding to the like for like rent growth comments you made for 2021. That 1.7% basis like for like that's lower than historically. Is this a result of lower market rents or the result of each gig being lower or combination? Yeah. Honestly, we of course, more more more careful also with guiding our like for like financial growth after the development that we had in 2020. It's the case that we see a a trend in the market so that we see rents not increasing that strong as in the past. But I mean, one has simply to to to say looking at the the actual results as look at the results from each period that came out over the course of the year. I mean, have been a little bit weaker than in the past. I mean, now we can start discussions where is that coming from. I mean, of course, one impact is that the reference period from from the rent tables from the smidge figures has been extended to four to six years. That's that's also some more pressure on on politicians inflation rates are lower, that also rents from this niche base should not increase too too strong. So I would say, yeah, it it should be more a conservative measure to having that in mind what happened over the course of 2020 that we guide really a reliable figure for the financial year 2021. Okay. Thank you very much. Thank you very much. There are currently no question in queue. If you like to ask a question, please press 01 on your telephone keypad now. Next, we have Japa Rain from BMO. The floor is yours. Next, we have Japa Rain from BMO. The floor is yours. Sorry. I was on mute. Can you hear me? Yeah. I can understand you now. Thank you so Good Just for next year, how much CapEx do you plan to spend in Poland? And how does that counter with the current firepower left that you have? And also just to get back on the lower like for like rental growth excluding vacancy reduction at 1.7%, what is your assumption in term of churn rate and reversion rate? Thank you. Well, looking at the investment that we're doing in Poland, you see on the slide that slide that we have in the presentation, page number 19, that we are investing approximately €1,100,000,000 in Poland over the next five years. Part of that is already done in 02/2020. So that means if you do a simple calculation, and that calculation leads to a correct number, on average around 200,000,000 per year needs to be invested in Poland. And this is also a good estimate for financial year 02/2021, perhaps a little bit more. So I would say something between 200 and 250,000,000 is something that you should expect as total investment in Poland. That, of course, depends also on the timing of further acquisitions in Poland. And looking at our current firepower, I just commented on the cash that we have in the balance sheet. So if we reduce debt by payments that we did after the balance sheet date for acquisitions, there's still something around $303,150 euros per million euros left. So therefore, for 2021, there's definitely not any short term financing need. So therefore, we should we should be very well prepared. And, yeah, again, we're doing in Poland investments of a really material size, but we're doing that step by step. So over the years, again, around €200,000,000, annually, you should expect as as investments. Investments. And the second question was around the like for like rental growth. The assumption for the tenant turnover and the reversionary potential are unchanged to financial year 02/2020. So we have in a normal year well, I should say more specifically to 2020 without this month of COVID nineteen pandemic. So during during the COVID nineteen pandemic, which is still ongoing, but during the first lockdown, I should say more specifically in March, April, May, we had turnover which was very low in our portfolio around 7%. Now we are back to a normal level, which is perhaps between 1011%, and that's also the assumption for 02/2021. And also the reletting rents are based on a scenario or developments that are very comparable with 02/2020. So that means the reduced like for like rental growth income is mainly coming from expected low rental growth from existing tenants, mainly from as as I just said before. Okay. I think we can ask for any further questions if there are any. If I may ask if there are any further questions? Well, it doesn't seem to be the case. And in case if we have here any technical difficulties, please feel free to to contact us right now after the call. The art department and firstly myself are always available for Hello? Any Hello, Mr. Simon? The call is Yes. Now Yes. Please continue with your question, please, Mr. Simon. Okay. Can you hear me? Yeah. I can hear you. Sorry. Okay. Great. Thank you very much. Yes, it seems so. Thank you for taking my question. My first question would be in regard to the pipeline and the acquisitions. Maybe first, in regard to Germany, what do you see there? Do you see anything do you have any number in mind that is maybe equal as in full year 2020 also in full year 2021 to be acquired? Acquired? And then in regard to Poland, because for now, as I understand, you're only acquiring land plots and where you intend to build property for to hold and to sell. But is it also attractive to buy portfolios or assets and integrate them to your portfolio then in regards to Poland as you did in the past in Germany? Well, looking at the acquisition market in Poland, I mean, that's just unchanged. It's extremely difficult to predict a specific acquisition number, and therefore, we have also not an official acquisition target. So this year so far was quite successful with more than 4,300 units. If we remember the year 2019, we acquired something around 1,600 units. And if you ask me was there any change in the market, I would say no. But simply in one year, we have more opportunities for what reason ever, and you get the sellers to the to the notary and you can sign it. So there's a kind of natural swing as as an average. And just to to give you an idea, if if in the past you say we're something around 2,000 to 3,000 units a year in a normal year should be something that is doable. I mean, we know acquisition markets are competitive, but we are buying also in smaller sizes. We buy more frequently. I mean, we're not penciling in in our that into our guidance, but just to give you an an idea where perhaps a a normal year should should end up, perhaps that's a number that could could be helpful. And looking at Poland, perhaps I can comment a little bit more detail on what we are buying. When I'm commenting on land banks and projects, that means that we're also buying projects from other developers. This is a smaller part of the total acquisitions. So out of the currently 7,600 units that we have in the pipeline as ready for rent or ready for sale project. I think something around 1,300 units are projects where we have more or less entered into forward deals with other developers, and that's mainly the case location in Poznan, where we then, of course, use their capacities where we think we have achieved a good price for the whole project. And that's not an existing portfolio, but there's then a project or projects that are started right now and are then finished in the course of 02/2021. What you cannot exclude, but what is currently not the case, is that we buy really existing portfolios. First of all, in the segment that we are looking at, that is newly constructed apartments in large cities in Poland, these portfolios are not really on the market, not as ready for rent portfolios. Mean, that's something where we as one of the first companies want to build up. And then looking at existing portfolios in existing buildings, the construction quality portfolios, if they are in the market, is really, in most cases, poor, not comparable to what we are buying in East Germany or in other federal states in Germany. So therefore, that's nothing you should expect, at least not in a material size in the in the in the near future. Okay. Great. Thank you. May can you hear me? Yeah. I can hear you. Okay. Perfect. So and the second question would be in regard to vacancy reduction. I need to get back to the 30 basis points of lower vacancy reduction because I just wonder, is it really a catch up effect? Or that you see then in Q4, maybe even switching into next year? And then these 30 basis points, where did they come from? Did they come from a lack of releasing modernization projects? Or is it rather of empty apartments you were about to newly rent, haven't spent any CapEx on it? Can you just give me a little bit of more of an insight into those 30 basis points? And then also into your where you see the most vacancy reduction going forward, maybe especially the focus on full year 2021? Well, quarter on quarter, the largest progress of the Wickes reduction was in the CAMMEZ area. We expect that especially in the Berlin area, you will see a strong reduction in the fourth quarter. That is coming mainly from the modernization programs that I already mentioned. And perhaps to make it clear, that's not, let's modernization program that takes some months and then we're letting it out. We really divide that into different stages and to really do that step by step. And therefore, it means that already in in summer, some of these modernization program ended. Then it has taken some longer time as expected to ramp them out, and we think this was for the very largest part, not a reflection of market development, but simply to restrictions from the the COVID nineteen pandemic or from many concerns that Tenet had to, to move during this time. And therefore, now this is this is kicking in. I would not say that this is kind of catch up effect. When I look into the reports today, so all vacancy developments in October, I mean, vacancy rate was already further reduced. So therefore, we are very optimistic that we can reach our target of a recurrence rate of 4.5% maximum at year end 2020. Okay, great. Then just the last question maybe on the guidance. In regard to the full year 2020 guidance, just look at it on a per share basis, then I'm already at €0.90 but you're still guiding at €1.17 So I have the additional acquisitions kicking in, which is included, but so just annualize that and add another €0.30 on your current nine month 2020 figure, then you would end up at €1.2 per share. So is it that I'm missing something? I mean, surely, is some higher maintenance costs, but are you more cautious somewhere? Or is it just that you expect more cost somewhere else than maintenance? And could you could you detail that a little bit for me, please? Yeah. Well, generally, you should not expect any surprises or how to call it that you should be aware of in the fourth quarter. What is really always difficult to guide exactly is not only maintenance, it's also income taxes. I mean, of course, we have here estimates, but let's say 2 millions more or less in, for example, income taxes or also then in the maintenance area is is then difficult to to to guide exactly. So therefore, we are always more comfortable to guide perhaps more towards the lower end of a possible range than guiding something that is then perhaps too high because at year end, we see, I don't know, 1 or 2,000,000 more income taxes. We did more maintenance work than expected, which is often not bad news, but simply perhaps a possibility of doing some projects more early. So therefore, that's that's really nothing nothing behind, but still uncertainties in perhaps these two areas are the reason why we are here. Let's say a little bit more careful. Okay. So in the sense of underpromised over the liver? That's that's, yeah, something that could be reasonable. Okay, great. Thank you very much. Thank you very much. That will be ending for question and answer session. I would like to pass this session over back to Mr. Martin Thiel. The floor is yours, sir. Yes. Again, thank you very much for listening to our call a little bit later today. If you have any questions, again, please feel free to contact Dominik from our department or myself. We are available for your questions. Have a good day, and talk soon. Thank you very much. Ladies and gentlemen, with that, we have come to the end of the conference call. Thank you for your participation, and have a pleasant evening ahead.