Earnings Call: Q2 2020

Aug 20, 2020

Dear ladies and gentlemen, welcome to the conference call of GIG Immobilian AG. At our customer's request, this conference will be recorded. As a reminder, all participants will be in a listen only mode. After the presentation, there will be an opportunity to ask questions. May I now hand you over to Martin Thiel, who will lead you through this conference. Please go ahead. This is Martin from TDG. Many thanks for diving in into our H1 twenty twenty conference call. We will go through the presentation, and of course, I will report on our H1 twenty twenty numbers, and then, of course, also say some words on the transaction that we announced this morning that you have probably seen, which is the issuance of a new convertible bond and the partial repurchase of an outstanding convertible bond. But let's start with the H1 figures, and I'm now on Page four of presentation, which is the highlight slide. Looking at the operational performance in the German portfolio, vacancy rates were broadly stable, a slight increase between the end of the second quarter and the end of the first quarter by 20 basis points. We've been now at 5.1. Like for like rental growth was a little bit weaker in the second quarter twenty twenty due to some effects from the COVID-nineteen pandemic mainly, and I will come back to that a little bit later. A very strong development from our point of view in the FFO development. So we are up in absolute amounts €2,500,000 quarter on quarter. And if you compare that with the previous periods with H1 twenty nineteen, we are up by more than 9%. The EPRA NTA or formerly known as EPRA NAV stands now at 20.77 up from $20.5 at the beginning of the year, which is increase even after the dividend payment. If you exclude the dividend payment from this calculation, you would arrive at total NAV increase of around 7%. LTV broadly stable at 44.9 after 44.8% at the beginning of the year. Very positive news from the acquisition front. So we were able to sign contracts for more than 4,200 units in several transactions from January to August 2020. You know that at the end of the first quarter, we had some around a little bit more than 800, so we've been successful now after the balance sheet date in July and August with other transactions. Total purchase price of around €163,000,000 a gross yield of nearly 7% and average vacancy rate of all portfolios acquired in the financial year 2020 of 21%. Closing of the acquisitions has to a smaller part approximately 800 units already taken place and that was in the course of the second quarter of twenty twenty. We expect that the largest part of the remaining acquisitions that will adhere to closing will take place towards the end of the year Q4, still a little bit uncertain whether this is then more the first part of Q4 twenty twenty or more towards the end of the year. Just smaller disposals with our ongoing disposal program 200 units, so that's not really material, so sort of book value. As in the past years, we also had our portfolio valuation by CBRE. CBRE valued the full portfolio and the outcome was a valuation gain of €174,000,000 for the German portfolio, that's a 3.3% semi annual uplift. And the new valuation levels for the portfolio stand now at $10.70 euros per square meter or a 5.9% gross yield. Coming to the next slide, Slide number five, which is an overview of the effects of the COVID-nineteen pandemic in our business. And to make it short, the effects are really very limited. You know from us, from our Q1 presentation, that we had voluntary waiver on rent increases in the period from March until June 2020. Since July 2020, we are, if you want, back into a kind of normal mode. So we are increasing rents again. So it's more a timing effect that we have seen in the second quarter and rent increases will follow-up afterwards in the next weeks and months. Vacancy rate, as said, already remained stable. We already see that we are now down at 5% in August 2020. So therefore, we had definitely on the vacancy rate not any negative effect from the COVID-nineteen pandemic. Also very good news, we had a very, very small impact on rent payments. So just 0.1% of our total residential tenants were not able to pay the rents as an outcome of any problems they had from COVID-nineteen pandemic. And even in the commercial tenants, the numbers are now even better than in the first quarter, so it's just 1.4% of the total commercial tenants who asked us for any rent deferrals. Also in Poland, the business was not really materially affected. Important was that the construction sites were running all the time, so we see here no material delays. We were able to acquire further land backs and projects. Besides Bordstadt, we have now three locations, Poznan, where we already had acquisitions in the first quarter and new in the second quarter, launched as our third location in Poland. What we've seen is reduced Q2 sales. I think we already discussed this in the Q1 call. So if you look at the numbers, the average sales number per month was down to around 20 units from something around 68 units per month in the first quarter. But we see from the numbers in July with nearly 60 units sold, that we are already back on a kind of precrisis level. And perhaps even more important, sales prices remain stable or even increased in the course of H1 twenty twenty. Let's move on to Page number seven, where we show you some details for the income statement. First of all, looking at the development between H1 twenty twenty and H1 twenty nineteen, the net rental income increased by €5,000,000 not only driven by higher rent, also driven by lower expenses from property management, here mainly lower ancillary costs of vacant real estate that we were able to reduce in the past twelve months. We saw a strong increase in the net income from our service business in H1 twenty twenty versus the prior year period by nearly €3,000,000 and it shows our expanding service business. Mainly this development is coming from our multimedia and energy services where you know that we're expanding this year by year throughout our portfolio. Looking at the net income from sales, don't be surprised that we have here even a loss of €1,400,000 in H1 twenty twenty. That doesn't really mean that we're economically selling portfolios of properties below book value, but we have simply here effects from the purchase price allocation from the first time consolidation of Vantage, a 3,300,000.0 additional negative effect is here included in this number. So if you want some more technical, therefore we arrived at a negative result economically, we are achieving of course here pure profits. Personnel expenses increased a little bit. This is then, of course, because our internal service business is growing. And very simply, if you compare it with the prior year periods, we have additional personnel costs from our business in Poland. Net financial results improved in H1 twenty twenty by €500,000 year on year, so this is also a good development. And income tax, as not unusual, mainly contain deferred taxes. You see that we have cash taxes in Germany that are still on a very moderate level, which is for the around €3,600,000 in the first half of twenty twenty. Coming now to the next slide, which is page number eight, more details on the EBITDA, FFO and AFFO calculation. First of all, looking at the EBITDA margin, from our point of view, definitely good development. So looking at each number, H1 twenty twenty numbers, we are now at an EBITDA margin close to 71% after 67.5% in the comparable period of the previous year. So that shows that we are not only growing our rents, but also are able to keep the costs on, let's say, relatively stable level. I already commented on AFFO development, which was very positive. We saw a slight decrease in the AFFO, which is then driven by higher modernization CapEx that we are using. Modernization CapEx, nothing new, so that means not any new programs for existing tenants, as you know, from us, mainly driven from CapEx programs for vacancy reduction here mainly in the Berlin and Cabinets region, unchanged basically to what you have seen from us in the last quarters. Again, important to point out that the total results from Poland do not contribute to the FFO I. So when we talk about the FFO I, that solely refers to our German business and we include all results from our business in Poland as it is in 2020, solely a disposal business into the FFO two. You see here on the right side of page number eight a detailed calculation. We're basically calculating a kind of net profit from disposals, cash after minorities, after effects from purchase price allocation, after any non cash effects, for example, from the valuation resulting from deferred taxes to arrive in the first half at a small loss of €800,000 And for the full year, we expect a significant contribution to FFO to from our business Poland as you know that most handovers will take place development business or in the construction business towards the end of the year. Coming to the next slide, Page number nine, just a small comment from my side. If you compare the figures from June to December, please be aware that the December numbers are still without any effects from our acquisition of Vantage that took place at the January this year. So some of the differences are caused by the effect. For example, if you look at the intangible assets, we pointed this out here in point number two, you see a goodwill of nearly $19,000,000 that is coming from this first time consolidation. On Page number 10, you see details regarding the EPRA NTA calculation. I already commented on the general development, and the EPRA NTA stands now at 20.77. You will see in the appendix we have a detailed calculation of the old EPRA NAV calculation and also the other two new EPRA NAV metrics. Looking at the EPRA NTA calculation, important to mention that we are not including transaction costs into our EPRA NTA calculation. Please have a look at the footnote. If we would do that, so if we would put on top of the numbers you see in the table the potential transaction cost, that means mainly the real estate transfer tax, then the EPRA NTA would be on a per share basis 2.84 higher, so that means would stand at 23.61 per share. We are not including this transaction cost. I know that this is something that is currently handled differently in the peer group because you know that from the past, we decided, I think, about three years ago to exclude that from former NAV calculations because we simply see here a risk in the current German law that this real estate transfer tax free share deals are not possible anymore in the future. So therefore, we think it's perhaps a more prudent approach to leave that out from the very beginning. Then I'm on Page number 11, which is the financing structure. The average cost of debt is now down to 1.6 with an total average maturity of the financial debt of seven years. The Moody's rating is still at Ba3 with outlook that is stable. Perhaps interesting to look at the last updated credit opinion that Moody's published some weeks ago in July 2020, and that confirmed that we are very stable even in this not easy times of COVID-nineteen pandemics. There's still further refinancing potential, euros $4.00 9,000,000 of German bank loans maturing or interest terms of these loans are ending in the next three years. So we included now the 2023 bank loans as well. And if we look at the coupons, they are between 2.52.7% in this bank loans. So as in the past with every refinancing, we will have material interest cost savings. And I'm coming now to Page number 13. That's table with the main data about our German portfolio at the June 2020. The total JV stands now at €5,600,000,000 If you include the Polish portfolio where the total JV is €150,000,000 we arrive at a total JV of €5,700,000,000 1,000 units more than at the beginning of the year. This is mainly the result of the closing of some acquisitions, as I already mentioned, in the course of the second quarter of twenty twenty. Page number 14 is a slide with details on rental growth think and the CapEx amounts also on a per square meter basis are very comparable to what you have seen from us in 2019 and in the first quarter of twenty twenty. Perhaps it's more interesting today to look at the development for the like for like rental growth quarter on quarter. If you look at the total like for like rental growth that we achieved in the first half of twenty twenty, we ended up with a total like for like rental growth, including vacancy reduction of 1.5%. And you have to take into account when looking into this number, basically three different effects. So what we had first of all is a lower impact from vacancy reduction than, for example, in the previous quarter, which is an effect of around 30 basis points. You know that during the COVID-nineteen pandemic, the relisting processes simply have been not that easy. So therefore, for us, the vacancy rates or keeping the vacancy rate at a stable level was definitely a success. But to make it clear, we will stick to our guidance for vacancy reduction. And the vacancy reduction for the residential portfolio should be at the guidance, which is 4.3% to 4.5% towards the end of the year. As I said, in August, we had 5%, so we should clearly expect now in the next month and in the course of the third and fourth quarter a vacancy reduction to come. Then we had again effects from the voluntary waiver of rent decreases that we did during the first and second quarters that's already discussed. And what we have seen and what's led to another effect of around 20 basis points is a reduced tenant turnover during the COVID-nineteen pandemic. So whereas our normal turnover stands typically between 1011% in the total portfolio, we have seen now more numbers between 78%, which is for us then quite unusual. Now the turnover is perhaps back on a quite normal level, so more towards the 1011%. So therefore, we also had a slight effect from reduced tenant turnover as the resulting rents then were not on that level where we normally have it. But this effect is not material, but in combination, we are now at a rental growth of 1.5%. And if you try to adjust this, then you end up at something which is perhaps around 2.2% as shown here in the presentation. And that's absolutely in line with the guidance for the total like for like rental growth for 2020, which is also unchanged, which still stands in a range between 22.5%. On Page 15, you see details regarding the vacancy rate reduction, but I think we already discussed this again in August, the vacancy rate was 5%, so we should see a positive development here in the next month and quarters. Page number 17 shows you more details acquisitions. Please understand that the individual transaction details we have to keep confidential, so therefore, perhaps also it's enough to look at the aggregate numbers for this year. Comparing that with the prior years, perhaps in the last two years. First of all, the total number of units is definitely positive, so we are already at 4,200 units for this year. That's, of course, a very successful acquisition volume for us in the first eight months. The vacancy rate is slightly a little bit higher to what we have seen in the last one or three years, but nothing extreme. It stands on average at 21%. Also a reason why the average cross year is not at an eight percent, but more towards a 6.8%. So the 6.8% is really based on the current cash flow. That means taking into account this 20.8% vacancy rate in the current portfolio. And also, I think we discussed this in last calls, we of course see increasing prices. But based on this vacancy rate, a growth rate of nearly 7%, this is still something from our point of view very attractive. Then moving on to the portfolio valuation, which is on Page number 19, you see here the results. The semi annual valuation uplift without any effects from CapEx was 3.3% that compares to 4.2% in H2 twenty nineteen. Looking at the absolute amounts, you see not really a material difference, euros 174,000,000 in the first half compared with €20 in the second half of twenty nineteen. The overall valuation levels are still on a moderate level, so 5.9% gross yield and $10.70 euros per square meter should definitely not be the end of the road. Any predictions on the second half evaluation? We will do, of course, a full year evaluation at year end. Again, it's, of course, difficult. But if you ask us, we don't see here any change in the demand for our properties, any change in the markets. We don't see any distressed sellers on the market that would potentially put pressure on valuation levels or on prices. So therefore, positive development that we've seen in the past should also continue in the year 2020 towards the year end valuation. Looking at our business in Poland, you see a summary on Page 21. You know this summary from the previous presentation. We basically gave you an update now including a new location, which is lots. All other parameters are unchanged. So the total pipelines, the really projects means we have already acquired the land banks or are already constructing the projects, stands at 5,800 units. There are additionally planned projects of 9,300 units where we are already negotiating. So we should be very much on track to achieve our midterm goal, which is unchanged to have a next three to five years between eight and ten thousand betting units in Poland. On page number 23, we give you some information about a very successful ESG rating that we received from Sustainalytics. Perhaps you have seen the press release that we published some days or weeks ago. ESG is, of course, becoming more and more important and basically was always a big topic for us internally. Now perhaps we look also more on communicating on this. Being amongst the top 5% in the total real estate sector worldwide should be a very nice outcome for us. ESG is not only, let's say, focused on environmental things, I mean that's still important, but especially responsibility during the time that we have now, good relationship to tenants, that's something that we really work hard on. So therefore, the total ESG score that we received in this and other ratings, I think, confirms that we're here on a very, very good rate. Then finally on Page 25, the guidance for financial year 2020. The FFO guidance for Germany and the disposal guidance for Poland is unchanged. Perhaps you've seen in the press release this morning that you're thinking about a potential increase of the FFO and also the dividend guidance that will come for 2020. That depends a little bit now on the closing of the acquisitions. Generally, if you look at the development of the FFO in the first half and you multiply the FFO for the first half of two, then you end up as an FFO of 173,000,000 Acquisitions could have perhaps an additional impact between 1,000,000 and €2,000,000 Perhaps we see also some tax benefits from the transaction that we announced today, especially from the repurchase of the outstanding convertible bond. So therefore, let us work a little bit on that and by the latest with the publishing of the Q3 results that will also include the FFO guidance for 2021. We will give you an update on the FFO guidance and the dividend guidance for 2020. And if everything continues as it is now, and that should be the case, then we're very positive that we are moving more towards an increase in the guidance in the coming weeks. Some final comments on the transactions that we or the transaction that we announced today. I think you have seen that we published that we're issuing today a new €450,000,000 convertible bond with six year maturity, a coupon between 0.3750.875%, conversion premium between 32.537.5%. So the outcome of this transaction will be announced today. Use of proceeds for this new convertible bond are: A, financing for our acquisitions, that's in total up to date around €163,000,000 You've seen that in the presentation. The second point, we're buying back also not in total, but with a volume of 50%, the outstanding €262,000,000 converted bonds, which is due in 2022 by a reverse book building process. So the total investment volume for this repurchase will be around €180,000,000 If you do it in a simple calculation and say, euros $450,000,000 from the new convertible bond, less total investment volume of around €180,000,000 from the repurchase, that leaves you with €270,000,000 net cash proceeds. If you deduct then the €163,000,000 for acquisitions signed this year, then you end up something around 110, €115,000,000 that are still left. And that is of course liquidity that we can use for further acquisitions, for example, in Germany or also in Poland. So we will report on the outcome of this transaction today regarding the new convertible bond, we'll report and inform you about the outcome of the tenders of the repurchase of the outstanding convertible bond tomorrow morning. That's it from my side as an overview, not just on this transaction, but also on the H1 twenty twenty numbers. And of course, now we are happy to take your questions. Thank you. Then we will now begin our question and answer session. If you have a question for our speaker, please dial 0 and 1 on your telephone keypad now to enter the queue. Once your name has been announced, you can ask a question. If you find your question is answered before it is your turn to speak, you can dial 0 and 2 to count your question. If you are using speaker equipment today, please lift your hands up before making your selection. One moment please for the first question. And we've received the first question. It is from Andrew Stobbe of Green Street Advisors. Your line is now open. Please go ahead. Hi. Good morning. I just I'm just wondering why do you believe the convertible bond is a good financing option? Just from the looks of it, it seems that you're buying it back from 400 and 180,000,000 for the principal of something along the lines of 130,000,000. So the kind of implied annual cost comes to north of 10% per annum over the three year period? Yeah. Thank you thank you for the question. I mean, you can, of course, look at a convertible bond. So I'm talking more generally purely from a more debt perspective and compare it with a corporate bond, say, okay, the coupon is lower, but you have the dilution risk. And if you buy that back, then perhaps it's expensive debt, which could be then the case. But we look at a convertible bond primarily from the view that we here placing equity also with a new convertible bond with a premium and to have flexibility. So also, we could have now decided to convert the existing convertible bond into equity. Then, of course, we have the dilution effect. But, I mean, perhaps the alternative or a fair alternative would have been in 2017 to place equity. So therefore, economically, we would have a similar dilution as of today again. So therefore, we still like convertible bonds. I know that this discussion, especially amongst German residential companies is intensive. But as I said, we're not looking at that from a perspective that we achieve somehow cheaper cheaper interest rate on debt, a convertible bond really gives us flexibility and it's really really also tool to place equity with a premium. And how should we think about this premium that you're paying now with the repurchase? Assume that won't flow through your FFO. The the premium or the first of all, the calculation is correct. Basically, that's 50,000,000 that we are paying on top or something around 50,000,000 on top of the notional amount, which will then not be included in the FFO. It's also, by the way, already reflected as a debt, as a derivative liability in the balance sheet. So we're already accounting and have accounted for that in last year's for the fair value of this option in our balance sheet. Thank you very much. That's all from my side. Thank you. The next question is from Kai Klosel Your line is now open. Please go ahead. Yes. Good morning. I've got three quick questions, if I may. The first one is on Page seven. Could you elaborate a bit more on, as you mentioned, technical effect on the income from sales due to vintage? The second question is on Page 29 of the presentation, where you show the split of the valuation change by regions. I was just a bit surprised about the relatively low uptick in values in cabinets after you've spent quite a lot of quite a lot for CapEx and modernization. Can you explain that a bit more in detail? And then the last question would be on the LTV. At the upper end of your target, virtually at the upper end of the target. Is it fair to assume that by September, it might be slightly above that 45%? And then what are your plans then looking forward as there's presumably limited upside in values for the end valuation? Thank you, Kai, for the for the question. First of all, as I try to explain this purchase price allocation effects a little bit more in detail, so what we had to do under IFRS that we account for every property that Vantage is constructing with the fair value. So that means also the construction projects which are normally valued at cost of the IFRS balance sheet on Vantage level are in our balance sheet at the acquisition date, that means in January 2020 at the fair value. So for example, if Vantage is selling something at 100 and their book value at cost is, let's say, we have it in our books from the very beginning at the 100. So therefore, as long as we are selling properties that already have been in the balance sheet of Vantage at the acquisition date, we're basically not making any book profits. And then on top of that, you have ongoing sales costs, that means mainly marketing costs or mainly any kind of broker fees that you're paying upfront. So just, I would say for the first one to two years, technically in the IFRS balance sheet, have a result which is around zero or even slightly negative. Of course, economically, the cash flow is there. So they are clear Vantage is making profits. So on their level, the margins are, if you look at really gross margins, perhaps something around 25%. You're right, today, candidates valuation uplift is not that spectacular, especially having in mind that we are investing a lot, but that's not an uncommon picture. So what we have seen maybe always in the past modernization programs. And then, of course, let's say, a kind of discussion with our valuers. Well, what's really the new rent level afterwards we can achieve? What's really the new vacancy rates we can achieve? And normally, after one or two years, we always get the relation uplift, but perhaps not already at the point in time where the construction process is still ongoing or the construction process, automatization process is just finished. So therefore, we need to prove that our plans are really going into the right direction. So therefore, achieving just small operation gains during monetization phases, that's uncommon. But here in chemistry, very positive that we will see here a positive development in the next one or two years also regarding validation levels. And LTV targets, you're right, basically we are exactly at our LTV targets, so the LTV target is approximately 45% and now we are at 44.9%, penciling in today's transaction where we're buying back an outstanding convertible bond, and that would increase the LTV by approximately 100 basis points. So they would go then from 45, to speaking rounded numbers, to something around 46. Well, if you have 46 and an LTV target of approximately 45, that's from our point of view, not a big difference. But it's clear, we don't want to lever up here, so we should not expect that we are now going towards a high LTV and go more back towards the 50 percent or something like that. So we clearly stick to our LTV target, which will take them some weeks and months to bring that a bit more down from our ongoing results. And also, by the way, we are selling assets not in material amounts, but this continuous sale of properties will also reduce the LTV in the next quarters. Maybe two quick follow ups on that. First one on cabinets again, the €4,900,000 valuation result, is this on top of the amount of CapEx you have spent? So what I'm asking is, is he where we acknowledge the amount of monetizations in full as monetization investments? And second question, also on the LTV, then we'll just assume that by the end, the LTV will be slightly above your upper limit? Or do we expect from the second from the yen valuation this to come down closer to the 45? And when that's the case, so we expect that year with year end, we are basically again where we are now. And regarding your first question, it's on top. So the it's a bit more than 4,000,000 is on top of the modernization that was then if we want to accept it by CRE. Okay. Great. Thanks a lot. Thank you. The next question is from Daniela Lungo of First Aid Investments. Your line is now open. Please go ahead. Yes. Thank you for the presentation. Can I ask two questions, please? One is on your rental growth guidance of two to two and a half percent for the full year. And I've I've noticed you've gone through the potential adjustment just to explain what the impact from COVID was in the first half. So my question is, is the guidance based on pure real rent growth, or should we look at this two, two and a half percent on an adjusted basis? Meaning that if we add back, the negative COVID impact would be two to two and a half percent. But if we don't add that, the real rental growth at the year end would be lower. No. Thanks for the question, and I have a chance to put it clear that based on real rental growth, not adjusted rental growth. Okay. That's great. Good to hear. Secondly, could could you give us some more color on the acquisition you've made? Are the and apologies if I'm not fully cognizant of the German geography. Are these locations similar to where you already operate? Why is the vacancy so high? Do you need to do some CapEx? Is there a lot of investments? So just a little bit more color for us that are not Germans to understand a little bit more of the portfolio that you are acquiring, please. Yes. Of course. And basically, all the transactions that we signed in the course of 02/2020, so also the transactions that we did after the balance sheet date, our typical TAG portfolio. First of all, looking at the locations that's, I think, 100% all located in East Germany, which is for us now for years a big focus. It's then not Leipzig and Dresden. It's more the the the secondary or the mid sized city in East Germany that we did we like a lot. And we also like vacancy rates as long as we understand understand what's the reason for the vacancy rate and what can we perhaps do better than the former owners. And therefore, as we are purely buying, and that's also I think for 100% of the portfolio for nearly 100% of the portfolio locations where we already are, we are very positive that we have here the right concept to fill up vacancy. And if you are now at a vacancy rate of on average 21, I mean, it's clear getting that to two or 3% is perhaps not possible. But reducing that year by year would bring us really very nice extra cash flows on top of the starting gross yield, which already stands at 7%. So that's really something that we like. And again, the total amount of more than 4,020 units for 2020 should also be something very positive. Okay. Thank you. Thank you. The next question is from Thomas Neuhold of Kepler Cheuvreux. Your line is now open. Please go ahead. Good morning. Thank you very much for taking my questions. I only have two questions, basically, on on the page 31 of the presentation regarding the NRE calculation. It looks like that you have chosen not to reflect the value of the service business in in the end of week. So I was wondering, firstly, what were your considerations here not to reflect the value of the service business here? And secondly, can you give us an indication what the FFO contribution of the Service business was in the first half year and what it could be this year? Thank you. Yes. I mean, that's valid question. Why did we not account in the EPRA NRE, so the net written statement value for the fair value of our intangible assets and intangible assets that's mainly the service business? First of all, there's one, let's say, formal reason. We have not any evaluation report on that. Honestly, we are little bit waiting a little bit what is really here the market standard within the peer group. And if it's clear that everyone is, you know, publishing valuation reports on the entangled assets, that means mainly on the service business includes this into the EPRA net reinstatement value, and this is something that that market needs and likes, then, of course, you would do it if you ask. Mhmm. And that's also, by the way, what what the EPRA guidance says. You can't calculate it on your own, so you need external relation. If you ask perhaps me personally, how do I see this? Is this something that makes sense? Well, I think everyone that has made an evaluation on intangible assets knows the range is really extremely broad. So therefore, personally, I would be careful when looking at fair values for intangible assets. But that's more a personal personal opinion. But, Thomas, perhaps give us some some time and perhaps towards your end, we will do something. And, it's clear if if this is something that is a kind of market dynamic peer group, then we would also follow for now it's just the book value. And the second question from the FFO contribution from the Service business, I think from the top of my hand, we had in the last year, we had a contribution for the full year of around EUR 8,000,000 to 9,000,000. If I remember that correctly, we're expecting for 2020 for the full year something between EUR 10,000,000 and EUR 12,000,000. And I think we are completely in line. So as a rough number, we are between EUR 5,000,000 and 6,000,000 FFO contribution for the Service business in H1 twenty twenty. Okay, super. Thanks a lot. Thank you. At the moment, there are no further questions. So as a reminder to ask a question, you have to press 01 on your telephone keypad. We've received another question. It is from Andre Renke of Baader Bank. Only one question. On your acquisition path, after the strong number of units you acquired year to date, should we expect more income for the remainder of the year at least in terms of signing? Or is this a status of 4,500 roughly? What is achievable this year? And a related question, is it fair to assume that if a mix or, let's say, larger state portfolio, what would come to your mind? A cash capital increase would be needed given your reach LTV target. That's the question, please. Yes. Thank you, Andre. Good morning. Mean, outlook on further acquisitions, it's always difficult. Normally, third and fourth quarter are typically stronger quarters. But yes, it's really difficult to make here a concrete focus. So first of all, we're happy with this more than 4,000 units. Should we expect another 4,000 units in the remaining part of the year, so the next four months, I think that will be too too optimistic. So Germany is definitely competitive, but let's let's see what what what what is what is possible. But it's really hard to make give you here concrete concrete guidance. Poland looks not that competitive. Here we have some some opportunities. We're doing this, as you know, step by step by acquiring further land banks. So therefore, in Poland, we'll be really definitely active. In Germany, of course, we're also looking at the market closely. We're working hard on that, but here we are, basically as well as in Poland, really price disciplined. And a question, if you see other significant acquisition size, whether it is Poland or it is Germany, do we need a capital increase? I would not would it assume that as a choice we need for the next month. But as we said in, I think, in the last call, looking especially at our plants in Poland and continuing there or expanding there our pipeline. We're investing more than 1,000,000,000 or at least that's a plan in Poland over the next five years. So at some point in time, at this point in time, it's perhaps not 02/2020, but more from next year onwards, we will also think and also perhaps do something on the equity capital market to have our our LTV here in in line with our target. At the moment, we're absolutely not worried that we get into another dimension with acquisitions regarding our LTV target. So if you the the acquisitions you have in your pipeline or you are working on, let's say, year end, there is no additional capital needed other than you you have from your operating business? That's the the cash cash is enough. So that's especially with the, hopefully, successful transaction from today, but the cash position should look very, very good. And and then you would allow to to exceed your LTV target of 45 to a certain extent. Yeah, I mean, if we are at an LTV of 46%, economically the situation would not really change. So we've also seen, let's say, a lower LTV in the light of that here, the situation does not really change that much. So if we're around the 45%, then we're absolutely fine. So one percentage point more or less doesn't really change our view on our debt structure. But again, it's very clear we don't want to lever up, so you should not expect that we're now moving towards the 50%. That's that's clearly not the plan. Okay. Excellent. That's from my side. Thank you. Thank you. The next question is from Georg Kanders of Bankhaus Lampe. Your line is now open. Please go ahead. Yes, good morning from Dusseldorf. I have one question regarding the Service business. Compared to Q1, I saw a decline in the expenses from the service business, while there's not such an increase against Q1. Is there some special in Q1 or a special factor in Q2 that's here in the expenses? Yes. Thanks thanks for the question. The the cost position as well as the the revenue position in the service business is floating quite strongly because of the energy business. In the energy business, we are mainly, to make it simple, buying gas. So and then if we have quarter with perhaps more purchases of gas, then we have more costs and perhaps also more revenues. So I think looking at the net numbers or related net income from services is something that makes sense. But looking at the development of cost position in in in total, that's then difficult to to analyze. Okay. Then but if the gas business is such important, okay, you need more gas when it's colder? Or perhaps we are also buying gas because it's simply cheap on the market, and then we buy it for the next quarters or the next two years. So that's really not really predictable. I think in the full year presentation, we also published details on expenses and revenues for each service business line. Perhaps that's then helpful to look into that, then we see a little bit the proportion of expenses and revenues within these different service lines. Mhmm. Okay. Yeah. Thank you. Okay. I don't know if there are any further questions left. Perhaps we are missing our operator now. Okay. There seem to be no no further questions left. If there are any questions left and we're now not able because of perhaps some technical problems to answer this, please feel free to call our our team or meet directly or or give us an email. Happy to answer that. Thanks for joining the call, and have a good day.