And welcome to our Q1 2021 Earnings Call. Reinhard with tradition, your hosts today are once again CEO, Rolf Buch and CFO, Helena von Roeder. I assume you have all had a chance to download the presentation. In case you have not, please go to our website where you'll find it under Latest Publications. This is once again a pretty thick book, but that is because it's really 2 parts.
The first is the earnings call presentation we will be going through today, so Pages 2 through 21. And the second is the more general investor presentation plus the appendix. We have combined the 2 into one document to use the same set for different events and situations over the next weeks. So Rolf and Helene will now lead you through the first part of the slide deck. And of course, as always, we'll be happy to answer your questions afterwards.
And with that, over to Rolf.
So thank you, Henley, and also a warm welcome from my side. I will start with the highlights. So I hope nobody will be surprised that we had a good start in 2021 like always. Our operating business, but also the market fundamentals are fully intact. COVID-nineteen is still very much a reality, but by now I think it is well understood why there is hardly no impact on our business.
Our top line total segment revenue was up almost 15%. EBITDA grew by 11%, FFO by 14% or 9.4% on a per share basis. As of March 31, our brick and mortar EPRA NTA, this is a new EPRA guide new EPRA KPI was 0.63 Raul Pu, EUR 0.22 per share. And our Beyond the Prix EPRA NRE was up with €0.77.59 per share. The next valuation will be in the half year mark.
And based On the work we have done so far, we estimate the total fair value growth to be between EUR 3,500,000,000 and EUR 4,500,000,000 for the 3 quarters of our portfolio, which we are evaluating in the H1 evaluation process. So there seems to be no slowdown in yield compression. However, we do notice a weaker momentum in yield compressions in locations where yield has already compressed very much like Munich or Berlin or Stuttgart. The LTV at the end of Q1 was 40.8%. If we look at the perpetual at the perpetual hybrid asset And the net debt to EBIT multiple was down to 12 times.
You probably also our latest issuance, which was a single bond for 10 years and a coupon of only 0.625%. And finally, before I hand over to Elena, a word on Berlin. The good news is that we now have legal certainty And that an individual state cannot pass its own rental laws. The federal constitutional court was very clear about it. Unfortunately, the story doesn't end there.
We are already seeing the back from supporters of the Rentfries and the nationalization campaign. And there is a real risk that in the wake of Berlin local election campaigns, the sentiment even became worse. This would be the opposite what we need. I'm convinced that we need a de escalation and a dialogue, Not a confrontation. With regard of rent growth, we expect an indexation for the new Mittsbiegel 21, which is actually indexed 2019 Mittsbergen.
And on this basis, we expected a mutual growth of roughly 1%, So 0.5% per year, which probably is closer to the new normal. And this is a hand over to Helene.
Hi from my side. We saw earnings growth across all segments with a minor exception of Development. This business means It is by definition a bit less linear than the other three segments. Nonetheless, we see ourselves well on track to deliver performance growth, not just in the overall top line, but also for all four segment EBITDA. With the exception minor changes at the margin, we had a stable portfolio of 415,000 apartments in Q1 compared to the prior year.
On that basis, EBITDA rental was up 5.8%. Supported by strong year on year growth in value add And recurring sales, we delivered an overall EBITDA growth of 11%. Accounting for lower interest expenses and Higher taxes, the FFO growth was 14.1% or 9.4% on a per share basis, The interest expenses were, of course, lower from our refinancings. At the same time, current income taxes were higher, largely as a result of increased disposals. So let's look at Page 6.
For a change, This is a pretty clean quarter to quarter comparison. And we also do not have distortions from the feed in effect with warm rents more in one period than the other one, like we did in all throughout last year. On that basis, our similar portfolio volume delivered 3.1 percent rental revenue growth and 5.8 percent EBITDA growth. Maintenance Expenses were very similar to that of last year and operating expenses were down 5%, both from operational improvements, but also because of fewer COVID related precautionary measures compared to last year. While the adjusted EBITDA operations margin of 81.7% is probably a little bit elevated, The trajectory of increasing that margin even on a stable portfolio is clearly intact.
On Page 7, we show the main operating KPIs for the rental segment. Organic rent growth was 3% up year on year, of which was 0.7% came from the market, 1.7% from modernization and 0.6% from new construction. Obviously, Q1 2021 was still impacted by the Berlin rent freeze. When we come to the guidance, you will see that our expectation for the year end is quite a bit higher Then these 3%. Our vacancy rate was 2.8%.
As we have said several times before, You may see a few basis points shift one way or another between the quarters, but this is broadly the level that we expect. Clearly, It is mostly impacted by modernization work, not by demand. The list of people interested in an apartment It's actually getting longer, not shorter. Again, maintenance expenses were in line with last year, Also on a per square meter basis, capitalized maintenance usually involves larger maintenance work. And here, we continue to think it is better to on the side of caution and carry out upkeep work that we can capitalize, but when we do not get more rent.
And with that back to Rolf.
Okay. Then let's go to the Value add segment on Page 8. We also had a good start here as well. Both external and internal revenue is up compared to last quarter and helped to achieve the 23% EBITDA increase. As expected, We are getting step better step by step, keeping rolling out what works and trying to come up with new ideas.
Contrary to last year, the snowfall and the cold temperature in Q1 2021 also helped a bit and supported the residential environment work. This is also the reason why our modernization work has been held back very little. Neither effect It's particularly meaningful to be with more exploit here. On Page 9, we have the result of our recurring sales. We completed the sale of 1182 Apartments in our recurring sales segment in the Q1.
The relatively high volume was mainly driven by 2 effects. 1st, a bit of spillover from strong demand already in Q4 last year that got pushed into the 2000 and 1 and second, by some harder to sell units that we managed to sell in a block. In spite of the elevated volumes, average fair value step ups were almost fully in line and well above our target of approximately 30%. And this is back to Helena.
So let's look at development on Page 10. This segment includes all new constructions of apartments by way of entirely new buildings, but it does exclude additions of floors on existing buildings. In Q1 2021, you see how this segment is a little bit less linear overall compared to the other segments, especially rental and value add. Development to sell was quite a bit higher than last year. Development to hold was a little lower.
And combined with more normalized operating expenses, the overall EBIT falls somewhat short of Q1 2020. This level of volatility can probably be expected. But if I look at the remainder of the year, I'm optimistic that we will deliver more EBITDA than last year. One interesting point I want to highlight. You may have noticed that most of the completions to hold were in Sweden, where we not only finished a small development to hold project, but also converted largely unused community spaces into rent generating residential spaces.
If we go to Page 11, then we can see that including the floor additions, We completed 379 apartments overall, of which 149 were to hold and 230 were to sell. The overall pipeline has not really changed. We're still looking at a long term potential of 38,000 apartments for our own portfolio and another 9,000 that we will be selling to 3rd parties. So let's go to Page 12 for our investment program. As I said before, this line of business is a bit more project based And not quite as steady from quarter to quarter.
What is more, in Q1 this year, we still had the reduced investment amounts for Berlin Because of the rent freeze as well as some COVID-nineteen and weather related delays, so that the overall investment volume It's lower than in Q1 2020. We are still very much on track for our guidance between EUR 1.3 and EUR 1,600,000,000 for 2021. And at least equally important, our investment level is sufficient in light of our CO2 reduction goals. We have included 3 investment examples in the appendix on Page 59 to 61. So let's move on to Page 13 for the NAVs or actually rather the NTA and NRV.
Without a portfolio valuation, these values don't move all that much in 1 quarter. So we are only slightly above the year end 2020. Please note that for the NRV, we are using the same value of the intangibles that we showed for Q4 2020, as this is updated only once a year. As a reminder, the NTA includes deferred taxes and purchases cost For our hold portfolio, but not for our sales portfolio. The ratio hold to sell for NTA purposes is 88% to 12%.
Please see our full year 2020 presentation or Page 63 in the appendix of this presentation for more details. On Page 14, we round up the issue of value. We want to give you an understanding what we see based on market observations, but especially in terms of the H1 2021 valuation work that is underway. As in prior years, we are being pragmatic At the half year mark and only look at our 30 largest and or most dynamic cities in Germany, plus Sweden, plus Vienna, which cover about 3 quarters of our overall value. Within the subset of our portfolio that we are revaluing, We are estimating the total fair value growth to be between EUR 3,500,000,000 EUR 4,500,000,000 for H1 2021.
Interestingly, but maybe not surprisingly, we see continuing yield compression, But with weaker momentum in markets where yields have already been compressed the most in the past, most notably Munich, Stuttgart and Berlin. But then there are markets where value growth appears to be running at a medium to strong momentum. These are mostly markets where we have seen medium range yield compression in the past. And finally, we expect the strongest momentum in some of the markets like Frankfurt or Hamburg, where values have already been growing strongly for some time now, but also in markets at Luebburg and Braunschweig That may have lagged a bit in the past. On Page 15, we have the LTV and the net debt to EBITDA Based on our standard definition, the LTV was 39.1% at the end of Q1 2021.
In light of the call date for the perpetual hybrid at the end of this year, however, it probably makes sense to start looking at the LTV, including the hybrid, which is at 40.8 percent because we are now in the position to repay it with straight debt. Either way, the LTV is at or even slightly below our target range, which continues to be between 40% 45%. The net debt to EBITDA multiple was 12 times, so a little below the year end 2020. There have been some discussions in the past, so let me reiterate our definition of the net debt to EBITDA multiple. In order to mitigate distortions by comparing an accumulated number like EBITDA with a spot number like net debt, We are using the average net debt of the preceding 5 quarters in relation to the EBITDA of the last 12 months.
Please note That our EBITDA number is reduced by IFRS 16 effect and does not include any positive impacts on any non core sales. Page 16 has all the relevant financial KPIs. I think many of you have heard me say that I do not think that LTV alone is a very meaningful indicator for the resilience of the company's balance sheet. And not surprisingly, I haven't changed my mind. I like to look at it at least together with the fixed or hedged debt ratio and the maturity profile.
And we clearly continue to be in very good shape here. Now you've all seen it, I'm sure. But in the context of the overall interest rate discussion Or concern, it is still interesting to note our 2 bond issuances in Q1. We issued €500,000,000 over 20 years for a 1% coupon and EUR 600,000,000 green bond over 10 years with a coupon of 0.625%. If I look at these terms and the current interest rate curve, I'm not really worried as it looks at refinancing But actually remain an opportunity.
By the way, the coupons on our latest bond issuance were once again very honest coupons. And that they mirror the actual re offer yield very closely. So we are not moving interest costs around the FFO and through the NTA. And with that
So on Page 17, I would like to talk to you and give you a little bit of an update about HEMBLA Because the integration of Heglar and Victoria Park has now been completed. But let me start by repeating the most important point. The whole idea of going outside of Germany is based on the conviction that the Vonovia business model of scale, Insourcing and efficiency will work in comparable markets. In that sense, Sweden was our showcase to prove that we are able to replicate what we have done in Germany. So we now have reached the next Malzstrom, which is a full combination of Victoria Park and Handler.
There is now one operating business with standardized processes on a single platform with a stable service center. There is one finance department with standardized processes And there is one scalable IT platform and no longer 13 individual IT solutions. That is what I mean by scale and efficiency. On that basis, we intend to continue the opportunistic external goals, roll out the value add initiatives and building up a craft for craftsman organization. After already achieving the financial synergies Last year, the full €30,000,000 of synergies that has been announced with the transaction will be delivered in 20 21.
And as you can see on the slide, there are a few more pockets that will generate additional synergies in the year 2022. So keep in mind, Sweden is a small country. It's probably oneten of the size of Germany. So these synergies Are meaningful and they are achieved. Probably also in the question and answer session, it will be an interesting page.
This is Page 18. Much has been said written about the federal constitutional court ruling on the rent freeze. Clearly, It is good to have the legal certainty. The court was very clear in ruling that the state cannot pass its own rental regulation. But what has received much less attention is the fact that this ruling comes at a very critical time with elections in Germany and in Berlin and most probably the nationalization referendum all at the same day in September.
We have already seen in the first reactions that the ruling clearly led to escalation of the rhetoric. Supporters of the Renfries feel betrayed by the German highest court. Their willingness to have a dialogue and to work towards a solution This fact and reason has not exactly increased. Without a certain level of dialogue and a common ground, however, The situation in Berlin will remain challenging, and I do not expect things to simply return to the way they have been before the rental cap. I think we can expect a new speaker a niche bigger to come out very pretty soon, but it will be probably The 2019 midstream, which will be indexed because there are no market trends and that you can use for a bottom a normal bottom up mid And our expectation is that this Mittsbergen will be probably give us an increase closer to 1% Reppu, over for 2 years, so relatively low increase.
On Page 19, I'd like to flag our sustainability report that we will publish on May 18.
We are
in the final stretch. But you have an external auditor review it and provide limited assurance. It takes a little bit longer, And we think it is important to add that extra layer of reliability. As in prior years, It will be based on GRI standard. And for the first time, we will also publish SRSB mapping because We know that some investors prefer set standard.
In terms of progress of our Sustainability Performance Index, We had a good start in 2021 and are currently running at a rate of more than 104% achievement. This is driven primarily by very good progress in CO2 reduction, senior friendly apartments refurbishment and customer satisfaction. But since SPI is a new metric, we are sticking to our guidance of roughly 100% For the full year for now. Probably, we are a little bit conservative. Speaking on CO2 reduction, you may have seen the Federal With our building climate products, we are already ahead of the government here as we have interim targets not only until 2,030, but all the way of CO2 neutrality until 2,050.
It is easy to say climate neutral by 2,050. Many of us will no longer be in the decision making positions then. So it is very important to have measurable binding targets all along the way. While we are on the subject, An update of the CO2 tax. We have spoken about it before, but the latest development is that apparently an agreement has been reached by which we may see a fifty-fifty split of the CEO to tax between landlords and tenants starting probably next year.
We understand that on this basis, a redefined proposal is to be developed, which will probably take energy efficient consideration into account. To give you an idea that what fifty-fifty for 2020 means, in In 2019, we emitted a little more than €500,000 CO2 relevance for the taxation. Of course, until 2022, we will have seen a reduction of that number. But for now, that is the best we have. If we then apply the €30 per ton and the 50% share, we will get approximately €8,000,000 for 2022.
And this is the headline of the guidance.
So on Page 20, we have the guidance for the current year. And we probably do not need to talk too much about it because actually nothing has really changed. Just one And we made and that is we took out the lower end of the organic rent growth guidance because that was under the scenario that the rent freeze in Berlin had stayed in place. So we expect around 3.8% organic rent growth this year, I. E, as the delta between December 2021 December 2020 on the portfolio of units that we owned on both dates.
So with this, it's time to wrap up. My brief summary for today call would be: 1, the first highest resilience in our operating performance continues, and the market fundamental and long term outlook remain favorable. 2nd, we remain confident that we can continue to deliver earnings and value growth for this year and the years beyond. And third, ESG focus and stakeholder reconciliation are more crucial these days than ever. As we have said before, most of our actions have more than just an economic dimension.
So expect us to continue and to try to strike the right balance going forward. To us, there is no conflict. We have built a business that can deliver the kind of returns that you expect from us and still make sure that we do it in a way that that threats other shareholders fairly. In the end, finding relevant solutions to ESG challenges will be evolving in multiple ways, financially but also beyond. And this is back to Rene.
Thanks, Rolf and Delaine. And I'll pass the ball directly back to Aurelia for the Q and A, please.
Thank you. Ladies and gentlemen, we will now begin our question and answer session. Rolf Buch. Rolf Buch. And the first question is from Thomas Neuhaus, Kepler Cheuvreux.
Your line is now open. Please go ahead.
Thank you. Good afternoon. Thank you very much for the presentation and taking my questions. I have 3, and I think it's the best if you take them 1 by 1. Firstly, I was wondering what impact rising raw material costs Could have on your development business, can you share your thoughts on what kind of cost inflation you are currently seeing?
And if the cost inflation could have a negative impact on the margins, especially development to sales segment?
So at this point in time, given most of our developments are sort of like Pre ordered, inflation isn't hitting us at this point in time yet. What we see is like we do see a little bit of inflation both in Steel and in Wood, what we expect though is that that seems to be more of a temporary situation as a result of Disrupted Supply Chains. So, so far, we haven't seen any indications. But clearly, we're looking out for any changes here.
Okay. Understood. Then the second question is on the expected EUR 3,500,000,000 to EUR 4,500,000,000 gains. If I did the math correctly, your LTV could fall around 34% to 37%, well below your target zone. What is your preferred way to get back in the direct zone, share buybacks, acquisitions, increase in investment program?
Can you share your thoughts on that,
So actually, I think Helene will tell you, I will give it back to Helene, but Helene will tell you that LTV is probably less and less meaningful. I think I heard her several times. Rolf Buch. There's other metrics, which are probably more meaningful. So I'm not nervous by being outside my corridor.
Boucher. Yes.
I mean, just to give a bit more color, we did quite a bit of we look quite a bit at sort of like investments versus share buybacks. And at what point, a share buyback is more efficient than an investment. And to tell you the truth, It's really most of the time that we would use the investment opportunity over the share buyback because the overall return for our shareholders On the back of those investment opportunities that we see and that is across all programs, be it development, optimize apartments Or upgrade building is much more attractive than a share buyback. Now as you also know, it's like that is Highly dependent on how the share price trades in relation to the NTA, but it's quite amazing how resilient that Financial modelers.
Okay. Understood. And then last question is on the upcoming election. The Green Party is currently in the lead and the left wing government seems possible according to the current force. Can you share your thoughts what the chances and or risks Rolf
Buch. If you look on the polls, the participation of the green government Repu. The European party in the next government is nearly sure. The question is with whom they will govern and if the next Chancellor will be green or black. I would say it is just a poll If the vaccination process of COVID-nineteen is getting better, I think we will see and the Christian Democrat Party Is all getting in order again after the little bit stressful selection of the potential cancer candidate.
I think they will come back Because in the end, the majority of Germans is still in favor of this part of the political spectrum. The Green Party is actually in reality 2 Green Parties, which is a Green Party type Berlin and a Green Party type Baden Wurttemberg, which are actually 2 different parties. And the interesting outcome will be with whom they will work together. So I'm not too much concerned. We have, of course, also good relationship to everybody, including the Green Party.
So this should not be as bad. Of course, you know and you will see in the past that today there was a new demand of the Green Party asking for mit Spiegel On a German wide level, but they have you have to be very precise. They are asking of an authorization on a German level to give local governments the right to make a mitchellpp and a mitendeker. So if this happens, for example, left wing government, we will be back 2.0 definitely in Berlin and in Bremen. There's other countries where we probably are not surprised.
We are not concerned at all, which is probably not in this failure, where actually the government is completely against the Mittelstand. But so on the federal election, we'll also make clear He will get back to debates about Mittendeka and Mittendstadt, Berlin type after September.
Okay. Pu. Thanks a lot.
The next question is from Shahab Wasim, UBS. Your line is now open. Please go ahead.
Yes. Good afternoon. Thank you for taking my questions. Actually continuing On the regulation, so in Berlin, you mentioned you're not going to clear back the rent due in the current context also is the ex corporation debate. I just was wondering to what extent will you still pass on the 2019, which we will increase now versus waiting, sorry, next year, post election to pass both 2019 2022 which And then yes, sorry.
So I will do question after question because this is easier for me and then you just start the next question. So Actually, the 2021 Mixed Bigger will come out, as I said, in probably a few weeks latest. So there's no need to adapt to the 2019 Miksch bigger. You can immediately adapt to the 21 Miksch bigger. So we haven't taken the final decision if we do it before the election or after the election, But this will happen in due course of the year 2021.
Okay. Thank you. And then in terms of revaluation, you mentioned the high yielding cities outperforming. How much is it institutional investor not preferring just relying for their IRR on yield rather than future growth? Or To what extent we should not be reading much.
This time it's Dortmund and Wissborg and then maybe Bayer and it's Berlin Reppu, outperforming again. Just wondering what we should read.
So I
think I would say that There is obviously the sentiment in at least of some investors that they need a minimum yield. And in some cities, the minimum yield is getting very minimum. So that's why I think people are buying probably a little bit better yields. And this is For example, in Dortmund and other cities. So I think this is the only explanation what I can understand.
And then there is a next In the cities where we have not seen a massive yield compression, which we don't see a massive yield compression, The ratio between purchasing power and rent is probably not the best in terms of view of some of the tenants. So Munich is high purchasing power, but for example, also very high rent, while Berlin is not so high rent but also low purchasing power. So there might be also this might also be taken into consideration by the market.
Right. Thank you. And then lastly, you mentioned about the energy modernization. I'm just wondering, so given the carbon tax Now you mentioned you have some sources telling you that it will be shared between Tenants and Landlord. Also given now the repousse.
From B. Gaye in June, also seeing that CDP, the reduced bond of glass from B2B Minus. I'm just wondering how is all these data points leading you to maybe consider accelerating Modernization based on getting carbon neutral sooner than 2,050.
Actually, we have now this I think we have now decided the Climate Pass. And I think we are the 1st and only company who has a binding Climate Pass until 2,050. I said also in the presentation to announce that you are climate neutral by 2,040, 2050 is very easy because you are not in charge anymore. So it is more important to have a binding path with a target year by year, which we have. So let's do now our work.
Let's do go down until 2,030. We see that at the moment, we are doing very good progress. I don't exclude that we are below our target curve in the next years and then we can set new targets. But it would be a little bit crazy And to just publish a binding plan CO2 reduction path and to changes a few months later. So let's do our work.
Let's see next year. If we are better, then we can discuss to get more ambitious. But from my knowledge, we are the only one who has a binding climate reduction path.
All right. Thanks.
The next question is from Marc Motzi, Bank of America. Your line is now open. Please go ahead.
Thank you very much and very good afternoon and thank you for taking my question. I have only 2 on my side. Can you please remind us what sort of impact the subsidies mentioned that the German government will provide you for energetic mobilization, both on new construction and existing buildings.
Unfortunately, you will get the same answer that would you have get in the year end. We are still working on it. It will be positive, but we have not disclosed data. I think we promised you that we will be before the end of the year. The programs will be completely new calculated, but it will improve, So it will be positive.
I'm sorry, we are not we cannot give you data at the moment.
Puert. Thank you, Raul. And my second point is on this deriving new Mitspiegel. Can you just explain us How is that going to impact your rental growth in 2021 2022? Because if I recall well, You haven't applied the Mitspiegel 2019, so you've got kind of a double benefit here from 2019 plus the increase of this 2019 Mitch Spiegel.
Am I right to say that or I'm missing something here?
No, you are right. We will actually be by Applying the 2021 midstream, which is only very little growth, we will automatically get actually the 2019 effect as well. So You will see a significant growth. That's why it's also our guidance is now at 3.8. So but for the FFO, of course, for the year 2021, it is not too meaningful because it's just a small amount And probably coming a little before the election or even after the election in September, we have not taken the decision.
So I think this is but you are completely right. We will automatically do 2 Mittsbiggel.
Okay. Thank you very much.
And the charm is that we are not sending out a letter to the tenant. Now we're applying the 2019. And a few weeks later, now we're applying the 21 mitig bigger. We are just sending out one mitig bigger and saying we are applying the mitig bigger given by the government, actually a left senator, And we are applying Zusmitzbergel. So we don't see any issues by doing this.
But keep in mind, it is Surprisingly lower. So we have a we will probably see a 1% increase in the 2021 midstream for 2 years. So this is below significant below inflation.
Yes. Brilliant. Thank you very much.
And the next question is from Thomas Wortheiser, Jefferies. Your line is now open. Please go ahead.
Hi, good afternoon. Just to follow-up on politics. On the Green Housing Program, which at least exists in draft form to my understanding. It seems they are not in favor of a rent freeze at federal level, About my Titan modernization charges to tenants and also Titan Relay. Maybe you can comment on the key points here.
What is your what's your key take out of that?
No, I think so. So you have to understand actually what the Green Party just says is, they say, okay, we have understood that a land cannot pass a rental regulation. And they have now explicitly written in their program That what actually they want is the right given by the federal government to the or the lender to pass their own regulatory regulation, Which is, of course, what will if somebody of these people are in charge, will happen. So it's very easy. The Bundestag can decide like with the meat price premse, that there is a framework agreement, which allows actually every state to pass his own Mittel and Mittelstorp.
So this is relatively easy done. And the constitutional court just said, It's only not possible that a state without this permission can pass a regulation. But of course, if the permission is given by the Bundestag, This is can be done. So if this happens, we are back to step 1 in Berlin Raul Pu. Then definitely in Berlin, we will see the Mittendeker and the Mittendrees again because the government is asking for it.
So and then the story starts new. So this is actually so that's why the ruling of the constitution abroad Good because it is clear that we can have not contradictory rental regulation. But in fact, it has not changed too much because I just have said that the Bundestag has to pass a law, like it has done with the mid price frenzy, to allow the states to do their own rental regulation. So This I think is in the moment, the discussion is postponed, but it's not finalized. Then the Green Party, you are right.
They actually have They want to have a reduction in the modernization program, but in the same time, they have understood that then they have to compensate the reduction By higher subsidies. So actually, we don't care. If he gets the subsidy if he gets the money from the tenant, it's fine. Or if you get it as a form of subsidy, it's fine as well. In the end, getting it in a form of subsidy, it's even more easier for us because Then we have no conflict with the tenant.
So the
first point you referred to actually was published today, was it right?
Yes. But this was published today, but in the end it is it was a debate of the last weeks. So nobody and I think this has to be very clear because not everybody of you is German native. Nobody is asking for a Mittensstaap and a Mittensdeckel German white, even not the left party. They're only asking to have the permission to pass a mitendeckel and a mitendstopp On a local level in cities where they actually have a critical situation because everybody is aware that there is places in Germany You have no imbalance between supply and demand.
And in these places, a meat and tackle would be a disaster because with a meat and tackle, You stop all investments.
So would you regard this news as the key driver for today's The share price performance?
I'm it's not my job to interpret to do any interpretation of what you are doing And your customers are doing. But no, I cannot judge on this. I don't understand it, but this is not my job. Okay. Very helpful.
My job is to deliver our job here is to deliver Stable FFO and value growth. And the rest is what the capital market has to be done.
Absolutely. Thanks a lot.
The next question is from Kai Klose of Berenberg. Your line is now open. Please go ahead.
Yes, hello. Good afternoon. Just two quick questions from my side. The first one is on the slightly higher cash tax Made in the Q1, you mentioned that it was due to the disposal in Q1. Could you indicate that this if this might also Steamed for the year that we may have slightly higher cash taxes for the full year 2021.
And the second question would be on Page 64 After presentation, could you give us a little bit more color on the split on the properties you were offered for potential acquisition Kind of a regional split or like Germany or Sweden or if this also included, for example, land which you meant want to buy for development? Thank you.
Let me do the taxes and Rolf will try to decipher Page 64, I think. So look, indeed, as we have sold slightly more properties in the recurring sales segment, we have seen slightly higher taxes. Now in a way this will come more or less in line with if we have a higher recurring result Recurring sales results, we will attribute slightly higher taxes in the same vein. That has nothing to do with the cash taxes in all of the other businesses.
Thank you. And coming to your second question on Page 64, I think this is a page which we published. If I look on this page, actually there's not too much new to be explained. So you see that this is actually a relatively stable pipeline of volume which is offered to us. And it is coming from institutional investors mainly because just of the size, so from professional landlords.
But there is no change in comparison to the previous years. Thank you. And this is, of course, Germany and Sweden mainly. Thanks.
And the next question is from Manuet Martin, ODDO BHF. Your line is now open. Please go ahead.
Pu. Thank you for taking my question. I heard the word FFO and it's not okay. I have to clarify something, maybe I'm confused. If we extrapolate the FFO in Q1, that would mean an overshooting on a full year basis.
What will happen in the next quarter to slow down the FFO?
So I think it is also a question if you as first of all, we have this the sales activity, which you probably cannot take 4 times. I think this is a very good argument. And the second is that probably To look on the guidance and realize the guidance in the Q1 is probably not the moment where you have to do it even if you are positive.
Okay. Thank you.
And the next question is from Chris Fremantle, Morgan Stanley. Your line is now open. Please go ahead.
Hi, good afternoon. I'm sorry, I just want Come back again on the political situation just so that non Germans can understand. I appreciate that you have been specific about the fact that states will have the option rather than the obligation to adopt a meet and Reppu. But do you not fear or should we not fear, should the market not fear that Just like the Meat Heistpremse, where this was also just an option to adopt by individual states, the vast majority of Feel pressurized to adopt that option. Is that not something that becomes a fait accompli, so to speak?
Or have I misunderstood?
I think the meat price ramse and the meat and Decker is 2 different worlds of Regulation. The Mittelas Wamsze actually is putting a limit to the new letting 10% above the Mittelbiger, which To be very clear, if I would be in a politician, I would do the same in these hot markets. This is more or less a market Adapted process. So you're putting a cap that you don't want to let the market be completely free. This is what I call a regulated market.
The meat and deckel actually is reducing rent of existing contracts and putting a cap or actually Is not allowing any modernization. This is a completely different tool. While the Mitt Braspremse is a tool of social market. The Mittel is a tool of a socialistic market. So this is 2 completely different concepts.
And if you look, for example, in Northern Westphalia, where we have a black yellow, so liberal, democrat and Christian democrat government, by the way, probably the new chancellor of Germany. They are very clear that even the meat and decal is out of debate and out of range. And the meat price premise was in debate. And in the end, they said we will not stop it immediately, but a little bit later. And this was with the support of the industry, and not to stop it immediately.
So I think we have published before a slide where we have shown you what is The combination of the different governments. And you can see that of Berlin and Kremin, actually, if this the states will have the right to pass their own legislation, if this right will be given by the Bundestag. Then Berlin and Bremen, we can expect I meet and Deckel again in Berlin and newly in Bremen. But for non home Australia, Saxony, Baden Wurttemberg, Hessen, Schleswig Holstein. Actually, these governments have explicitly said that they think that the Mittel and Decker is the wrong way.
And if you look on the results, what the Mitt and Deckel has generated in Berlin, it has just generated a mess. In Berlin, there is less apartments available now than it was 1.5 years before. There is less new construction. Pooh. So I think there's a lot of arguments against the Mittel.
There is only a very few arguments. And even me, it will be very difficult to argue against the Mitra Strebenza.
That's helpful. Thank you.
And sorry to just add because it's a little bit breaking news. The Greens have asked for the politicians in Berlin to open the ability To do a meet and deckle, but the Green Party leaders, Harvek, has said that he does not want to have the meet and deckle, but wants to find other alternatives To sort of limited rental growth. So it seems like it's not that the Zettaton are complete, sorry, Within the Greens, it's a debate and it's pretty clear that the Greens in Berlin sort of like the ruling is a German party I'm taking a different stance than the Berlin Greens, which is, I guess, not surprising.
Thank
you. And there are currently no further questions. And we haven't received any further questions at this point. So I hand back to the speakers for closing remarks.
Okay. Thanks, Aurelia, and thanks, everyone, for joining. As a reminder, our H1 'twenty one results will come out on August 6. Until then, we'll be on a virtual tour with a number of roadshows and conference attendances. Our financial calendar on Page 78 of today's presentation shows our planned activities for the coming weeks and the most Up to date version is always available on our IR website.
So much for today. As always, let me or the team know with any questions or comments you may have. We're looking forward to staying in touch. That's it from us for today. Stay happy and healthy and have a great day everyone.