Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome, and thank you for joining the Vonovia SE full year results 2022 analyst and investor call. Throughout today's recorded presentation, all participant will be in a listen-only mode. The presentation will be followed by a question-and-answer session. If you would like to ask a question, you may do so by pressing star and 1. Press the star key followed by 0 for operator assistance. It's my pleasure, and I would now like to turn the conference over to Rene. Rene, please go ahead.
Thank you, Francine. Welcome to this earnings call. Your hosts today are once again CEO Rolf Buch and CFO Philip Grosse. I assume you have all had a chance to download today's presentation. I guess we gave you a bit more time this time around. You will understand why that was the case. We do apologize for the inconvenience that this surprise timing may have caused you. Rolf and Philip will now present the results and give you also a general business update. Of course, as you know, there's gonna be an extensive Q&A afterwards. With that, over to you, Rolf.
Thank you, Rene. Welcome for our full year earnings call for 2022. I would like to have a bit of a different start today by giving you more context on how we see things and why we have made the decision we have made. Let's start with page 4. There is, of course, no doubt that the environment we find ourselves in is very different from 12 or 18 months ago. Looking at the near term, we are faced with macro-driven challenges, mainly because the drawback of our stable and robust business model is that it does not react as quickly as most other business. That is the flip side of the stability which we all like.
The unprecedented speed at which interest rates have gone up as central bank reacted to the consequences of the Russian war on Ukraine weighs on some of our key metrics for now. It is therefore important that we take a very sober look at the consequences for our business and analyze the impact of this environment very carefully. That is exactly what we have done. We conducted a comprehensive stress test when we used much more bearish assumptions than one can realistically expect. This was to make sure we have sufficient headroom, and we will not get into a situation where we have to raise emergency equity or do fire sales. That is what we need to avoid by all means, and should be able to avoid even in such a highly bearish scenario. Philip will share the results with you on page nine.
What is equally important is that we also understand the medium and long-term consequences of this new environment. It is crystal clear to us that two of the relevant megatrends, which are important for our strategy and our business, are becoming more dominant, providing an even more favorable operating environment for us. We do not foresee any scenario under which the German government will simply not care about the growing supply and demand imbalance or the fact that the real estate sector keeps falling short of the climate targets, risking Germany's 2030 and 2045 goals on CO2 reduction. We all remember what happened to former UK Minister Liz Truss when she tried to ignore market forces. Whatever the answer of this crisis are going to be, we are convinced they will provide further tailwind for us.
We own a product that is desperately needed by an increasing number of people and what is priced way below market values. We have capabilities which are more needed than ever to be a part of the solution. Turning to page 5. The 4+2 strategy is still valid, and we do not see a need to make a radical strategic change. Of course, the focus has shifted. Acquisitions are off the table for now, and European expansion is on hold. The disposal of our 10% stake in France for almost EUR 100 million and above what we have paid is clear evidence for this. The four pillars are relevant as they have ever been.
On property management, I think our KPIs speak for themselves, and while I understand how some people are still cautious on rent growth acceleration, I think the evidence we have seen so far is pretty clear. The financing strategy brings with it considerable challenges in this environment, but that does not put the strategy itself into question. Diverse funding sources and a long-term maturity profile are keys in this environment as well. Portfolio management is about investment and disposals. Investment in our portfolio will continue, of course, and our commitment to the climate path is as strong as it ever have been. On disposals, the focus of the past sales has been mostly on cleaning up the portfolio. This process is basically completed.
Just look at where we have exposure today and consider that we have sold more than 100,000 apartments since then. The motivation behind the disposals, we are now trying to do it, of course, of a different one. We want to free up capital and use the proceeds to delever and bring our debt KPIs comfortable within our target range to safeguard our current rating. Value add is about generating additional revenues and EBITs from our customers and assets, as well as for monetizing our platform value by extending our services via business to third parties. Let's come to page 6. Capital discipline is key in the moment, and I don't think anyone will disagree with this statement.
If you look at the steps we have taken between Q1 and Q3 of last year, it is obviously that we have put a lot of measures in place to make sure that we exercise this discipline. When it comes to dividend, the case is not black and white. In addressing the consequences of the Russian war on Ukraine, central bank around the world has been increasing interest rates at an unprecedented speed. The drawback of the Vonovia stable business model in a regulated market is that it reacts only slowly to the new environment, and the initial impact on our KPIs is negative. The new environment also escalates the relevant megatrends around which we have built our business, especially the supply-demand imbalance in the big cities and the need for climate change. Fight for climate change.
This will lead to an even stronger fundamentals in the medium and long term. As dividend continuity is a key priority for Vonovia, offering adequate dividend remains an important objective in light of a significant part of our shareholders base who counts on dividend as a form of shareholder return. In the current environment, capital discipline is also critical. It is therefore prudent to adjust the payout ratio for the full year 2022 dividend and strike an appropriate balance between capital discipline and return to shareholders. In the German legislation in Germany, it is for the annual meeting and for our shareholders, so for you to decide, but we believe our proposal of EUR 0.85 per share strikes such an appropriate balance. From a cash point of view, we estimate the expected cash out to be around EUR 350 million, given the scrip component.
No matter how cautious you are about the strength of our balance sheet, this amount cannot be a make or break difference. Our decision underlines our responsiveness to what shareholders, what you expect from us, regardless of our firm conviction with respect of the medium and long-term robustness of the business model. By proposing a cut of the 2022 dividend and maintaining the scrip component, we show that we take capital discipline serious in this regard as well. Not paying any dividend for the last year is simply too extreme. It would be unnecessary and send the wrong message about the stability of our business and may further increase the cost of equity. To be very clear, both management and supervisory board consider the 2022 dividend cut to be an exception and remain fully convinced of the Vonovia stability.
Both boards explicitly confirm the general and unchanged dividend policy of paying out around 70% of Group FFO after minority. This policy makes sure that the retained earnings, plus the proceeds from recurring sales, provide sufficient funds to sustain the investment for our climate path without jeopardizing the robustness of our capital structure. With this, I hand over to Philip.
Thanks, Rolf. A very warm welcome from my side, and let's move to page 7, where we want to give you a quick update on our free cash expectations for 2023. As you can see, the starting basis for 2023 is clear, with EUR 1.3 billion cash on hand. We then have the FFO, and I will get to the specific guidance a bit later, but the midpoint is EUR 1.85 billion. We have netted the capitalized maintenance with the additional cash from recurring sales that is not included in the Group FFO. As I'm sure you are aware, the FFO only includes recurring sales, EBITDA, minus cash taxes for these sales. The portfolio investments are unchanged, with EUR 850 million as previously guided.
We expect this to take us to around EUR 2 billion, so clearly cash flow positive. The next blocks are based on our disposals, for which we guide the free cash flow generation in excess of EUR 2 billion. While it is true that the market is still difficult, the negotiations and feedback make us confident that this continues to be a realistic target for the remaining of 2023. There can be no doubt that the transaction market is challenging at this point. Clearly, we equally do not see a complete shutdown based on the negotiations we are having. Looking at the different buckets with a diverse product range for different types of buyers, we have multiple sources that make us very confident. With that, back to Rolf.
On the joint venture structures, we have very good negotiations, but the recent primary acquisition against former employees are not helpful. We do remain optimistic that such a transaction can be done, and we will take the amount of time what it takes. Municipalities are a different potential buyer group, and we are getting serious indications of interest from various municipalities. Right now, we are talking to 7 different one in 6 federal states. General speaking, Social Democratic cities with tight housing markets tend to be the one where the interest lies. Here, 2 good negotiation about mining from volumes underway. Of course, municipalities are experienced to buy single buildings, so to buy portfolio for them, it takes more time.
We do reconfirm our support for disposals of Deutsche Wohnen's health care business. Of course, it would have to be for the right price. I guess this shows where these kind of transactions are possible. Multifamily houses are also promising sales channels. We have sold 35 apartments at a 7% premium and a net initial yield below 2.5%. The market is slow and transaction do need time here too. Our sales channel includes our commercial assets. This is a granular portfolio with an aggregated asset value of just under EUR 1 billion, of which we are currently marketing a meaningful part. Finally, there is the newer buildings department, which work well for owner-occupiers, and we are also preparing projects for a global exit.
It is probably fair to say that our price flexibility is higher in the case of global exits for new buildings, as we would prioritize cash generation over price optimization. The bottom line in all this is we are in the market with sizable volumes, and we are in good conversation and negotiation. Our experience every day is that the market is not dead, but it remains difficult for now, and that is why we are taking more time to strike the right balance between pricing and capital redeployment. Back to Philip.
Thank you. Moving to page eight. We show an update from last quarter on the upcoming quarterly maturities for 2023 and 2024, including a breakdown between unsecured and secured financing. By comparing the numbers, you can see that we have made some good progress. As a general strategy for this year, we look to roll over secured financing and to buy back or repay unsecured bonds with excess cash to delever and meet our internal debt KPI targets. In terms of hedging, we have a EUR 1 billion zero cost swap option caller in place to address part of the 2023 refinancing needs. We have also very recently agreed on a EUR 550 million secured loan for 10 years. The coupon is almost a full percentage point more competitive than comparable unsecured bond financing.
Further negotiations on rolling over secured debts are progressing well, and we have on top the EUR 600 million loan from the European Investment Bank that is not yet drawn. On the bond side, we want to repay for at least as much as possible of the upcoming maturities, especially in 2023, with the liquidity that we generate from selling assets. The magnitude, of course, depends a bit on how much cash we can reallocate at the end of the day. Moving to page nine. That is new and important. I will spend some time on this one here. It is really key to understand the context in which we take our decisions. It's no secret that we are more optimistic about our position and outlook than many of you. As you should expect from us, that view is based on a very sober analysis.
We usually provide guidance for 1 year, but our internal assessment is based on detailed multi-year business plan that we keep very much up to date. We took this plan, flexed the assumptions, and used really bearish input parameters. The result is not a realistic scenario, but a highly adverse one in which we still have sufficient headroom. Take our interest rate input parameter, for example. We are using 6% per year for this exercise, which is around 50% above our current refinancing rate in the banking market. I acknowledge that expectation for the development of our values differ quite a bit, but it appears that it is somewhat a consensus that forms around -10%. We have page 46 in the appendix to provide a bit more color on what we mean.
For this stress test, however, we have assumed 10% value decline this year, another 10% in 2024, and that obviously on top of the 4% value decline we have seen since H1 2022. On disposals, we pretend for the stress test analysis that we will sell nothing in terms of joint ventures, in terms of municipalities, Deutsche Wohnen healthcare business, non-core multifamily homes or commercial assets, nothing. Not this year, not next year, and not in 2025. Again, to be very clear, this is not our expectation, that is, of course, the point of the entire exercise. Finally, for rent growth, we have not assumed any acceleration, which is definitely, again, not our expectation and more importantly, also not what we currently see in the market.
To be clear, none of the assumptions reflect our view, but the purpose of a stress test is to prepare for a scenario that is a lot more negative than our base case assumption. To cut a long, story short, all our four bond covenants have plenty of headroom, even in this scenario. Obviously bond covenants are one thing, but the rating is important as well. While the bond covenants are binary, the ratings are much less black and white. Vonovia, as you know, is rated BBB+ by S&P and Baa1 by Moody's. Each with a stable outlook based on the company's relevant debt KPIs and committed financial policy.
While the rating view is anchored around the debt KPIs, the assigned rating is considered over a longer period of time, usually 12 to 18 months, and in context with other factors such as scale, business profile, liquidity, and access to capital. The rating agencies consider the debt KPIs over a period of time, assessing how a metric evolves over an extended period or to what extent it remains sustainably or stabilizes materially in relation to the target levels. As a consequences, there are no hard or automatic trigger levels for a rating change. In any case, and that is important, for 2023, we consider our current ratings safe in this stress test scenario. With the measures we are taking, we aim to secure this rating beyond 2023, and this is the focus of our actions.
If we were to assume that we are not successful with these measures, our stress test analysis shows that the maximum risk is a one-notch downgrade, that would still be a good investment-grade rating. Again, make no mistake, this is under the assumption that we see a period that is much more adverse and much longer than we realistically expect, and it assumes that we fail with all mitigants, such as disposals or higher rent growth. Our clear target is and remains to protect our current rating. To sum this all up, the main point is that we do not foresee any need to raise emergency equity or to have to engage in uneconomical fire sales, both from a liquidity and leverage perspective, in order to remain within very healthy investment-grade thresholds. Moving to page 10, which shows the segment overview.
Here, following the very successful integration of Deutsche Wohnen, we are now able to show you the Deutsche Wohnen contribution within the different Vonovia segments. Of course, the biggest impact was in the rental segment. We have also restated the 2021 numbers to reflect the Deutsche Wohnen contribution across the segments, but last year it was only for Q4, of course. The Group FFO of EUR 2.036 billion was 20% higher than last year and almost at the midpoint of our guidance. On a per share basis, Group FFO increased by 17% to EUR 2.56. We were not able to fully pass on the EBITDA growth as some of that was absorbed by higher interest expenses because of a larger debt volume and somewhat higher current income taxes. Moving to page 11.
As you can see, rental revenue was up 23%, which was of course largely a volume effect. On the cost side, the increase was smaller for both maintenance and operating expenses, even though we have only realized about EUR 20 million of synergies from Deutsche Wohnen transaction so far and in line with our expectations. On that basis, the rental EBITDA growth exceeded the top line growth and was more than 25% up. Synergy realization will be much higher this year compared to last year, and it will be a meaningful boost to both the EBITDA operations margin and our cost per unit. Moving to page 12. Here, organic rent growth in 2022 ended up at 3.3%. Here, 1% is coming from market rent growth, the remainder investment present. Of course, that number for now excludes the impact from higher inflation.
We will show you on the next 2 slides how that is now changing. Our vacancy rate is 2%, which is actually the lowest level we have ever had since the IPO. I don't think it was lower than that even any time before the IPO. The next chart is new. We included this chart because we get quite a bit of pushback from you guys who fear that rent collection will come under pressure given what we see in terms of price development. I think the numbers speak for themselves. Rent collection rate, which has always been high to begin with, is at its highest level. We are only seeing a default of some 20 basis points of gross rents. Finally, maintenance. We are more or less on the same level as last year on similar volumes.
Again, this I think is a good proof that we were able to compensate inflationary pressure. With that, back to Rolf.
Thank you, Philip. For my part of the presentation, page 13 and 14 are probably one of the more important. We think this is a changing environment. It needs to have a little bit better and detailed training of what is a Mietspiegel all about. Let's take a closer look at market rent growth and Mietspiegel. On the left-hand side of the slide, we have a reminder on the Mietspiegel basics. While there's 1,000 details one could discuss about the Mietspiegel system, there's one basic fact that is important to understand for all of us. The Mietspiegel is a market-based instrument. It is not the result of the political will. This is specifically the case if we talk about the detailed, so-called qualified Mietspiegel, which will be mandatory for large cities starting 2024.
We probably all have ignored the small changes in the German legislation. That means that there will have to be a true and fair reflection of local rental levels and based on a scientifically recognized methodology. That is why in 2022 we have begun to see an acceleration, this is driven by supply-demand imbalance and not by inflation yet. Going to page four. Maybe even more interesting is a look ahead. We have listed the large cities in our portfolio and the timing of when we expect a Mietspiegel update, plus what kind of update. The first large city this year was Munich, which came out with a new Mietspiegel that was 21% higher than the one 2 years ago.
This Mietspiegel is based on a full bottom-up calculation of market evidence after Munich has rolled over the Mietspiegel 2 years ago, when inflation was still very low. We should not expect all other Mietspiegels to come out at 20% plus. Clearly, this is a proof that the Mietspiegel is based on the market and not on the political will. For your information, Munich is managed by a Social Democratic mayor. In general, we see 2 scenarios for most cities. Cities that did an indexation last time when inflation was still very low, and that has to do a full bottom-up calculation this time, like Munich, where the increased supply-demand imbalance will be the main driver. Cities that did a full bottom-up analysis last time and now will do a rollover based on the much higher CPI, which we see now.
Either way, the actual market dynamic will translate into higher Mietspiegel growth than we have seen in the past recent years. You all have forgot what happens to Mietspiegels with inflation. This higher end growth is relevant in two aspects. First, it gets reflected in the cash flow projections and all else equal leads to a stabilized valuation with positive impact on LTV. This is yield expansion driven by a higher numerator, not a smaller denominator. Of course, the final valuation will also be dependent on market evidence, the higher cash flow projections from accelerating rents will impact valuation directly, and that will be positive for the values. Second, it increase the top line and supports the FFO. Not everything will come immediately because some of our apartments are already priced north of the Mietspiegel because they were relet or modernized recently.
Because of the maximum annual rent increase caps, the so-called Kappungsgrenze, might not allow for the full impact to be reflected at once. This is only a timing issue. One final word on Berlin. Berlin used the option rollover based on CPI in 2021. They would need to do a bottom up calculation based on market evidence to maintain their status as a detailed Mietspiegel. You know, if you don't have a detailed qualified Mietspiegel, landlords have the right to use the comparable apartment methods to fix the rent. However, there is not enough time left now to prepare that, and that is why we expect Senat Berlin to implement a simple Mietspiegel in 2023 to bridge the gap before they do a full bottom up calculation in 2024.
Let's see what the growth rate in 23 will be. I think it is fair to say that it will not be around 1% like 2021. If you ask me, my estimate is around 6% for 23 and then a full bottom up analysis for 24, which has to lead to a very attractive rate as well. Let's go to page 15. The EBITDA from value add fell short of our expectation. While we did see growth internally and externally, we were not able to pass it down to the EBITDA level because of higher cost base. The negative impact were mainly the reduced investment volume, technology change in plant heating systems, inflationary pressure, as well as COVID-19 safety measures and increased absence ratio due to sickness and quarantine, which forced us to rely on more expensive subcontractors. Page 16, recurring sales.
Both volumes and fair value up, step up were higher than in 2021, the number of sold units fell a bit short of what our guidance because of the more challenging environment condition, especially in December. The appetite for this product is still there, more for vacant units, we do not have too many of those. While Q4 was the strongest quarter last year in terms of volume, in spite of the challenges, Q1 this year has been comparably light so far. As you saw on the cash flow side, the liquidity from recurring sales is sustainable and far higher than the EBITDA contribution minus taxes that is included in the Group FFO. For 2022, it was almost EUR 500 million of cash, of which only a small part is included in the FFO. With this, over to Philip.
Yeah. Moving to page 17, on our development segment. As you can see, that continues to be very attractive business, very healthy gross margins in a somewhat supply constrained market. We completed in excess of 3,700 units in the last year, of which roughly 1,700 units were to sell and 2,100 units were to hold. As you can see on the lower left-hand side, we have been shifting, as we have discussed previously, more projects to both development to sell and in line with our revised capital allocation policy. Most new constructions are being sold to owner, occupiers and sometimes to retail investors, but projects are also more and more made ready for global exits. Moving to page 18, on valuation. That will probably not come as a surprise by now.
Looking at, full year values did not move that much, as the growth we have seen in H1 was basically reversed in H2, where we saw almost a 4% value decline. For the full year of 2022, the P&L impact on valuation was minus EUR 1.3 billion and resulted with almost EUR 700 million from the standing portfolio, EUR 450 million from development projects, predominantly in Deutsche Wohnen, which we now carry at cost and not as before at the estimated disposal price, meaning fair value. Last, EUR 130 million in our nursing segment. So our standing portfolio was down half a percent, excluding investments, and up 0.5% , including investments.
As of December 2022, our portfolio was valued at a 3.6% gross yield or a 28.1 rent multiplier, which as you know, is the German way to look at this equation. This, of course, is based on in-place rents, and the multiple would be quite a bit lower on the market rent basis, where we do see a lot of dynamic, as Rolf alluded to. The German portfolio was valued at EUR 2,590 per square meter, which compares to a median purchase price for condos of EUR 3,600 and a median purchase price for new construction of EUR 5,300.
If you look at Berlin, our fair values were slightly above EUR 3,100, and that compares to an average condo price of EUR 5,500 and new builds of even EUR 8,500. If you look at the delta, that is really more than 40% and 60% respectively. Speaking of valuation, the higher interest rate environment also resulted in a technical impairment loss under German GAAP. No consequences for the consolidated accounts, but for the statutory accounts of our holding, Vonovia SE. Moving to page 19 on EPRA NTA, that was at the end of last year at EUR 57.48, so down roughly 8%. This change was driven by deferred tax adjustments in the context of our new portfolio clustering, asset revaluation and depreciation, and obviously the 2021 dividend.
Moving to page 20, we already covered the 2023 and 2024 maturities on one of the previous pages. What is important on this page is that you see the impact of our overall smooth maturity profile. The average cost of debt has gone up from 1.1% to 1.5%. Of course, this is nothing. This is not nothing, but it does show you what we have pointing out all along. The higher rates eat into the overall cost of debt only slowly. Rolf already spoke about the accelerated top-line growth. This is exactly the interplay we expect to play out in a higher interest rate environment.
The other number I want to draw your attention to is the fair value of our debt, which was 83% of the nominal value at the end of 2022, compared to 96% at the end of 2021. This opens up opportunities for liability management to the extent we can deploy excess cash. On the next page, we show our three main debt KPIs. Net debt to EBITDA was 15.8, so very much in line with what we had expected and guided for. Our target, 14x to 15 x, and the measures we have put in place will enable us to get there. ICR stood at 5.5 x, so, down 0.3 x, but still very comfortably above what rating agencies expect for our current rating, and certainly way above the bond's covenants.
LTV was just outside of our target range at 45.1%. Here too, I do expect the measures we have initiated to move the number back into the range as we are working to get towards the lower end of our 40%-45% range in the medium term. In terms of LTV sensitivity, our dividend proposal provides a 1 percentage point advantage over a full all-cash dividend, assuming a scrip take up similar to previous years. Moving to the next page, on investments. The 2022 investment amount was a bit more than EUR 1.4 billion and in line with the prior year, even though the portfolio was, as you know, due to the acquisition of Deutsche Wohnen, substantially bigger.
This is of course, the result of us stepping very hard on the brake, the 2023 guidance takes this even a step further. The reduced investment program is the consequence of us increasing the return hurdles for our investments. The funds we are investing are generating returns above our increased weighted average cost of capital. The most attractive form from a net initial yield point of view remains apartment modernization. Sorry, apartment optimization with a yield on cost of more than 10%. On the right-hand side of this page, we provide some additional color on development to sell. We sometimes hear concerns from investors that this is a kind of black hole that brings with it unpredictable liquidity needs. I think the truth is quite different. We have committed about EUR 3.5 billion of capital to our development business.
This is less than 4% of our balance sheet. To be also very clear, we are not providing more funding. Development to sell is a self-financing entity, which means that new projects must be financed through the disposal of finished projects. We are very much looking towards a recycling of our inventory. In light of the growing supply-demand imbalance, this part of our business, however, remains very attractive, but the scope in the overall context of Vonovia is small and will remain small in this environment. With that, back to you, Rolf.
On page 23, I would like to talk about energy efficiency. Coming back to our investment program, page 22 showed how our investment volumes has come down. This raised the question to what extent our climate path is impacted. If you look at page 39, you see that we are actually ahead of the curve. On page 23, we show the energy efficiency classes for our German multifamily home market versus our portfolio. That shows how we are in a more favorable position because of early start versus the market and our high level of investments over the year. We have just 5% in G and H combined, which are the two energy classes that Germany and the European Union are targeting to clean up first until 2030.
We can afford to slow down for the time without jeopardizing our climate targets. In broad terms, assets with an energy efficiency Class C or better can be made climate neutral by installing heat pumps, where assets with D or below will also need a comprehensive modernization of the building envelope. Of course, what we are doing, we will also concentrate in energy heat pump installation in the next years. Let's not forget, good energy performance is not only important with a view towards the climate. We also expect to see a value dispersion between more and less energy efficient assets. On page 28, we provide details around our SPI, which is the leading non-financial KPI for Vonovia.
The 103% target achievement for 2022 was driven by good performance on CO₂ reduction, lower primary energy need for new construction, a higher ratio of senior friendly apartments conversion, and yet another increase in customer satisfaction. We fell short on the 2 criteria, employee satisfaction and gender diversity. Now Philip will give you an overview of the investigation.
Yes, moving to page 25. What are the allegations? Last week, Tuesday, as you know, authorities searched two of our offices in connection with allegations against meanwhile former employees and also external parties accused of fraud, embezzlement, collusive tendering, and commercial bribery related to the awarding of contracts to subcontractors and to the detriment of Vonovia. No allegations are made against Vonovia. What is the impact of that? Based on the information currently available to us, the maximum order volume with third-party companies potentially affected by the investigations for 2022 is less than a percentage point of the maintenance and investment volume and at similar low levels in prior years. The actual impact of fraudulent action is expected to be only a fraction of that.
We and our auditors therefore agree that the allegations do not have any material impact on the company's net asset financial position and results of operations. What is our reaction? We have set up an internal task force, that is going to be headed by the general counsel, and it's going to be sponsored by myself to investigate any potential involvement of individual within Vonovia, including its decision-making bodies. Any breach of duties by representatives of Vonovia, any impact on Vonovia's customers, but also obviously claims by Vonovia against third parties. In this context, as you have all have probably read, we have mandated Deloitte and Hengeler Mueller to conduct a very comprehensive internal investigation, and that, to be very clear, will also include a comprehensive we-review of our internal control system. What can you expect?
A very comprehensive and diligent internal investigation, and we will make the results available once they are available, but that will take 2 months. What you can expect also is full cooperation with authorities and improvement of processes if warranted based on the results of the investigation. We will update you when material new information will become available. Let me now move to the next page on guidance, where we have presented our updated guidance. The majority of our KPIs are stable, but we have adjusted 3 line items, revenue, total EBITDA and Group FFO, and that is really to reflect the higher uncertainty around volumes and profitability in our sales channels. You will see that we have decreased the lower end of the ranges for all 3 and also made a small haircut of the EBITDA of the top end of the EBITDA range.
Our expectation for the operating business are entirely unchanged. This is a bit technical to ensure that no one is overly optimistic around the 2 sales channel that go into the Group FFO, which is recurring sales in our development business. To avoid misunderstandings or other disposals to pursue the joint ventures, the potential disposal of Deutsche Wohnen healthcare business, non-core, multi-family homes and/or commercial assets, they all have no direct impact on our guidance.
Now it's with me to wrap up the call. As you have seen, the operating business is stable and produces increasing cash flow.
The market fundamentals in terms of operation could hardly be better. The mega trends around which we have built our business are becoming even more relevant and dominant. The discussion around the direction of our fair value is important for the balance sheet stability. We have shown you in the stress test scenario that we consider our balance sheet waterproof even under very adverse assumptions. For our equity valuation, the fair value seems to be much less relevant because the market has already made up its mind. The average historic spread between our FFO yield and the bond yield was around 440 basis points between 2013 and 2021. It has widened to around 720 basis points on average since the beginning of 2022. This is a shift of almost 300 basis points.
Unless you believe we need a massive equity raise, I hope we were clear on how we think about that, this leaves quite a buffer for anyone's negative expectation. This is, we finish the presentation.
Open the Q&A. Francine, back to you, if you can get us started on the Q&A, please.
Yes, thank you very much. Surely. Ladies and gentlemen, we will begin the question- and- answer session now. Anyone who wishes to ask a question may press star followed by one. If you wish to remove yourself from the question queue, you may press star followed by two. Anyone who has a question may press star followed by one at this time. We have the first question from Charles Boissier from UBS. Your question, please.
Good afternoon. Thank you for taking my questions. Three questions from my side. The first one.
Quick, Charles, you know us by now. Sorry. Can we take them one by one, if you don't mind?
Of course.
Great. Please.
First question on disposals. Rolf mentioned on JV structures, there are ongoing negotiations, but the current investigation is not helpful. I just wanted to understand, should we deduce that because the platform was a bit of a selling point, potential buyers are now waiting for clearance on the investigation before the JV sales can happen?
To be clear, there is a part of the world where this rivalry and all this is very sensitive in going into partnerships. That's why, I think some of our potential partners has to go to compliance clearance. That's why it is probably taking longer than we expected.
Thanks. Second question on slide nine. Just to play a bit devil's advocate. You mentioned this is a stress test analysis. Is it what you're discussing as a stress test with your board and the rating agencies? Some of the assumptions like the 10% value loss in 2023, what confidence do you have this is actually a stress test scenario? It seems that right now there are not so many disposals, so we don't have as much visibility on the clearing price. Thank you.
I mean, this is essentially what is the stress test scenario about. What we essentially did is to max out a couple of assumptions and to see what would actually need to happen before we were to consider any more drastic measures in terms of disposals, at prices below our book values and/or any kind of capital raise. I think, and I'm kind of repeating what we have said in the presentation, if you were to consider an uplift in interest expenses by another 50% compared to where we are today, and over the next years to consider, in addition, what we have already seen, another value decline of, in aggregate, 20%, and on top all mitigating factors, not bearing fruit in terms of asset disposals.
A radio silent, if you will, disposal market. I think this is a very drastic description, of a potential adverse scenario, but which equally provided us with a certain degree of comfort that we do have, in fact, a very stable and resilient business. On rents, which account for the vast majority of our EBITDA and FFO contribution, there is no downside risk. That also provides us with comfort that we don't need to hurry into any kind of premature decisions on the disposal side.
Right. These are the levels of assumption at which you would move into more aggressive capital preservation, if we were to reach those scenarios.
If it's getting worse than that, we would need to consider more drastic measures. Yes.
Okay. Clear.
To make clear, one thing is clear, this is not a one-time exercise. We have taken the decision a long time ago not to give you a long-term guidance. That's why this is the first time. We have changed a little bit from this policy because in the end, we are talking here about this in years' performance. Of course, internally, we are managing the company with a much longer, 5 years and more plan. Of course we have it on the radar. If we see any changes, this plan is adapted on a regular basis. We just wanted to give you comfort that we are not sitting here being just optimistic. The optimism we have in our business is based on a very fundamental, on data-driven analysis of the near-term future.
This is actually the chart or the reason for this chart.
Thanks. Last question from my side, on the guidance. You're very positive on, organic growth. You mentioned, especially in Berlin, you're mentioning 6% revision this year and a very attractive level also in 2024. That sounds really supportive. My question is, given those assumptions, what has changed, in term of, the Group FFO guidance for 2023 to be -9% at the midpoint versus slightly below 2022 before? This guidance seems more negative. Is it due to the refinancing assumption, but presumably you were expecting a bit more disposal, at the start of the year? Thank you.
Look, as you can see, we have left untouched our guidance on our operating business, the rental business. We have not baked in any evidence we see year to date on rent developments like the one Rolf mentioned in Munich. I think realistically on the rental side, there might be positive surprises. What we equally need to recognize is that the transaction market remains challenging, and part of the EBITDA and part of the Group FFO is driven by how successful we are in the recurring sales business, but also in our development business. In particular, with respect to the latter, we do see that multipliers are coming down.
We equally see that we are able to achieve better rents. Our expectation is that there remains an elevated risk that the increase in rents is not sufficient to compensate for the compression on multipliers. That kind of margin squeeze is reflected by somewhat adjusting the top end of the range we have given previously and also made us to extend the range of FFO and EBITDA in order to, yeah, acknowledge that portion of our earnings, which are more driven by the performance of our disposal business.
Thank you.
The next question comes from Bart Gysens from Morgan Stanley. Your question, please.
Yeah. Hi, good afternoon. Yeah, I also have 2 questions. I'll take them one by one as Rene asked. Look, I want to come back to capital values. CBRE said recently that it's guiding to a 4%-6% decline for German residential portfolios for the first quarter of 2023 alone. CBRE seems to be pretty accurate most of the time, but that means that your LTV has gone up another 2 points to 47%, all else equal. That guidance came before the recent shock to the banking system. If 10% is a stress test number for 2023, are you basically assuming that pressure on appraisals is moderating despite the shock to the banking system? Are you basing that on conversations you're having with potential buyers? Thank you.
Let me do, let me do the start, Bart. I mean, first on capital values, I think what we need to recognize is that we also have a compensating effect by how the rental side of the equation behaves. And Rolf was alluding to that. What we continue to see is very thin, transactional volume. So, for us, we will do essentially a full-fledged revaluation of our residential portfolio, with half year numbers. But to make any additional commentary around that, I think is premature given that we simply don't see a lot of transactional evidence.
All of that having said, I mean, if you look at data, I mean, very recently for condominiums, data has come out, which points to a somewhat stabilizing of the developments. There are and there remain kind of conflicting messages, how you interpret, the different numbers. I think in this business, we simply see or we simply need to see some more transactional evidence because either way, I'm not willing to base any assumption view on these kind of.
Thin volumes because we see at the market.
Bart, probably one addition to this. I think this time is over where we discussed about average value development in Germany. As I have shown you in the energy quality of the buildings. I think with all the debates which we see in the moment in the European level and in the German level of about energy classes and buildings, people start to realize that a non-modernized building is getting an issue. This, of course, has an impact on the value of this building. What we will see, and this is also the prognosis, that a better portfolio, especially with less of these buildings, which has to disappear until 2030, is probably valued different than a portfolio which has an German average or even below.
I think if you are talking to CBRE, and to the data, they are talking about an average Germany, and this is probably a fact which you have to take into consideration as well.
Okay. Thank you. My other question is about the scrip dividend. I mean, last year, the question's been asked multiple times: What would you consider to do to delever? Would you consider raising equity? The answer was often quite consistently, "No, raising equity below NAV doesn't make sense." Now you're effectively offering, you know, a couple of EUR 100 million . Not a huge amount, but still, a couple of EUR 100 million at EUR 18 or EUR 19 a share. 70% discount to NAV, creating, what, 2.5% dilution. while you have full flexibility on the payout, right? You're not a REIT, you don't have to pay out anything. Can you talk to the rationale why do a scrip dividend? Thank you.
Yeah, Bart, let me take that one. I mean, as we have pointed out, to preserve liquidity, that was one of our key priorities. Obviously the scrip dividend is working in that direction. Second comment, if you're offering a scrip dividend, it is non-dilutive, if you opt for the scrip dividend. If there is a dilution effect, it's only for those shareholders who opt for the cash component. Here, given that we are issuing shares at market, the dilutionary effect is marginal.
Kind of as a side note, if you are referring to the huge discount at which our stock is trading, vis-à-vis EPRA NTA, that is certainly true. It also tells me that capital markets apparently don't put too much value to our EPRA NTA these days.
Okay.
Let me, Bart Gysens, let me also add one more commentary. I mean, not paying a dividend is basically not striking the right balance between very different objectives we have seen in in our shareholder base. I'm also very sensitive towards those shareholders who count on the dividend. I'm very sensitive that I don't want to lose shareholders and thereby implicitly increasing our cost of equity and not paying a dividend at all. That was also one very important consideration we have had in the discussion in the management board and also in our discussions with our supervisory board.
Bart, only to.
It could also be-
Yeah.
Sorry, go ahead.
No. Probably let me also add one point. In the German context, it is not the management board and not the supervisory board who decides on the dividend. We are just doing a proposal. We have to hear to all our shareholders, because you don't want to have, as a management board, a decision in the shareholders meeting that they do not accept your proposal. It is not finally our decision. It is, and I think it's completely right, a decision of the owners of the company to decide how much money and in which form they take it out of the company. We are doing a proposal.
I understand that, Rolf. That's very clear. The problem is a lot of investors, you can also entice certain investors back to become a shareholder again, right? Perhaps some investors have, as they say in English, voted with their feet and have sold the shares. Maybe by, you know, not paying a dividend, you can entice some of those investors back. Look, I appreciate it. I shouldn't talk too long on this call. Thank you very much for taking my questions.
Thanks for splitting them.
The next question comes from Jonathan Kownator from Goldman Sachs. Please go ahead.
Good afternoon. Thank you for taking my questions, and I will go one by one. The first one, coming back to your organic growth, right? You had 1% in 2022 coming from the Mietspiegel. Clearly, you're telling us that the new Mietspiegels are coming, you know, for some at much higher levels. I think it's still difficult for investors to picture how much your organic growth can reach only through Mietspiegels. Can you help us understand if you achieve the numbers that you're talking about, what is the path through to your organic growth? What could it be, in theory? Thank you.
I think it is not about series. That's why we have not changed our rental guidance actually, in the new guidance. There's probably an uplift potential, as I have explained to you, first of all, it is clear that the Mietspiegel will come up higher. You, we don't know exactly what will happen in every individual city, you cannot calculate this. Second of all, I have explained you, in the FFO immediately, not everything will come through because we have relet an apartment, we are above the Mietspiegel today. You know, we can relet by 10% above the Mietspiegel. We have done modernization. This is a lot of variables which we cannot calculate in detail before we don't know the output of the Mietspiegel.
The 2 slides in this presentation deck is just to remind of all of us that it is probably helpful to do a little bit more work in getting educated in detail on the Mietspiegel system. What we all, I think, have ignored in the past is that with a qualified Mietspiegel, a municipality, it's very expensive to make a qualified Mietspiegel because you have to pay external advisors to do it. That's why municipality normally do a qualified new Mietspiegel every 4 year. The 2 years in between, it is by the German law an alternative not to do a full one, but to apply the CPI. The CPI was relatively low.
That's why nobody actually all but everybody ignores the fact that in reality, by the way how the Mietspiegel are done, in fact, the Mietspiegel is linked to the CPI. Especially for the municipalities which are not doing a Mietspiegel every second year. If they are doing a new Mietspiegel every second year, the reality will be shown like in Munich. I just wanted to make sure that we all together go a little more deeper in the Mietspiegel system, because I think we were too lazy, also including ourselves, to go too deep in the way how the municipality and the legal framework to be done. I cannot and I will not give you a new guidance for the rental growth. Let's wait and see, wait and see.
We just wanted to make sure that it's better understood because it has two components. One is the FFO. This is probably happening later. The other one is the values. There the Mietspiegel increase goes immediately into the discount cash flow, which is actually a part of the valuation, of course, dependent on market evidence.
Okay. Understood. You know, look, I mean, any guidance you'll be able to give, I think going forward will be helpful to investors. If I may, the second question. On the funding, you know, obviously, given the current environment, you know, some investors' concern around the ability for you to access financing altogether. Can you please help us, can you give us a bit more color on who are the type of financial institutions that you're getting secured debt from? How are they feeling in the current environment? You know, is the tap still open or can it close? In effect, you know, what would it take for you to not have access to any liquidity whatsoever at this stage? Thank you.
Jonathan, by all fairness, it's for me a very theoretical question. I mean, the unsecured market, whenever we tap the unsecured market, we get far more demand than what we offer. Also in the secured banking market, I actually did recently a banking roadshow. I've seen all our bigger lenders, and they were all very eager with us, to make additional business. I mean, I was alluding, to the fact that we have just actually yesterday signed, the agreement, for a EUR 550 million 10-year secured financing, with a very competitive spread. We have a number of ongoing discussions, with the aim, to secure additional secured financing as and when we need it.
Appetite is there. In terms of universe, we are talking to a group of roughly 15 banks. Those are banks who are on their side able to refinance themselves through the so-called Pfandbriefmarkt, that allows them in turn to offer us very competitive terms. There is sufficient sufficient headroom and sufficient appetite. For me, to be very clear on this point, it's not an issue of accessing liquidity. The issue we are facing is that financing has become far more expensive. That is the reason why we intend to delever also with a view to manage our interest expenses.
Just for the sake of clarity, can you just remind us how big is the Pfandbriefmarkt, and has it ever closed before?
It has never closed. At least I'm not aware that it has ever closed. I think the limitations are more in context to be read that we have an unencumbered asset ratio.
That kind of defines the headroom. If I recall correctly, the additional headroom we have comfortably is roughly EUR 7 billion. We would probably not stretch that to the limit, but by that you can see that there is a lot of additional funding available in the secured banking market. Again, as a reminder, this is not about additional funding, what we are currently doing. It's about extending existing financing through the secured banking market, and our aim is to replace, to redeem the unsecured bit.
Okay, very clear. Apologies, one last question. Rolf is gonna like this one because he gets it all the time. How are we progressing with, you know, government programs around housing, how they are thinking about the market, and are the new discussions around the European IRA program something that impacts you directly? Thank you.
No. Unfortunately, we were very aware about the European program probably the same time as the German government or even before. The European program is actually why I'm talking about the megatrend because it will generate a lot of distressed assets in Germany, but not ours. That's why we have so slight in it, because the remaining 5% is easy for us to get rid of until 2030 by modernizing. Of course, in Germany, in the moment, if you read the German newspaper, it's a high emotionally debate because now the first landlords figure out that they will have a problem. Probably the time until 2030 is late. The German government, and especially the economic minister of Germany, which is also responsible for environment protection.
Mr Habeck, he is green. I don't think that a lot of movement will happen there. If Germany is not fulfilling its targets, it has to pay billions of money to the European Commission. This is all set in stone, so you cannot change it anymore. I think, yes, we will have a lot of debates which will lead to the demand for more subsidies, doing something against helping landlords. All this we will see. In the end, my assumption is that, of course, probably some changes, but more or less the European legislation and the, especially the German legislation, which is a bit weaker, will not get weaker, but even more stronger. This will be a problem, and this is for us a chance.
We have prepared a few years for this chance and probably will materialize not in 2023, but probably somewhere in 2026, 2027, 2028.
All right. Thank you.
The next question comes from Thomas Neuhold from Kepler. Your question, please.
Good afternoon. Thank you very much for the presentation. Looking at my questions. My first question would be on your disposal plans. Can you give us an indication what the total amount of assets you currently have in the market for sales? In addition, I remember in the past you refrained from providing concrete disposal targets for a specific year, stating that this is not beneficial for your negotiating position. I was just wondering, now you have this EUR 2 billion target out for this year. Does this mean that you are already well advanced these potential discussions about disposals, or does this maybe reflect the increased focus on deleveraging? Maybe you can also comment a little bit on the price sensitivity of buyers currently.
To be clear, I think in our presentation you see the volume which is out for disposal, because this is the sorting which we provide. This of course we don't want to sell, and I think this was a business understanding in this year all. This is the volume what we see is for disposals and non-coercive low yielding, and it's the condos. This we are in the market. I have to add, in the case of the municipalities, there are also some demand for assets coming from the municipalities which are not sorted in these buckets, but which are in our more core assets. The which we are in the market is bigger than this.
I don't want to give you a detailed number, but it is exceeding significantly the EUR 2 billion what we are in the market. I think this is the answer I would like to provide you. Again, thank you for reminding me. That's why it was also important to show to the outside the stress test, because everybody has to understand that Vonovia cannot be blackmailed. We are not in a position that we have to transact. This is an important message to the market.
I understand. The second question is.
keep in mind the municipalities, especially the Social Democrats, For them, the price is not the main driver. It's a specific asset they want to have for very different reason, because it fits well to their social agenda or to their political agenda. This is what we have seen, by the way, in the disposal in connection with the Deutsche Wohnen deal. This was 19,000 apartments which were partly coming from us, but partly were selected by the mayor because he wanted to own them. you can, you probably also to give you some more flavor because it is public. The interest then, you know, we are very big landlords there.
There is a decision taken in the parliament of the Social Democratic Party saying they want to force the Mayor to buy not only the 3,000 offered apartments we are offering to Dresden, but the 5,000. There is already decisions made in parliaments, in this specific case in Dresden, it's public, where there is decision to buy. Here we have a partner, which wants to buy. It's probably from the economical point of view, not the most, let's say, economical decision to go to somebody and say, I want to buy without the price. This is how politics is working.
Thank you. The next question is a follow-up question
To be very clear, to not give you an understanding. The problem is that the municipality companies, and we are experiencing it now, they are normally buying one building. Assuming the process and using the process to buy one building on a portfolio takes a lot of time.
Okay. The next question is on the funding situation. Can you provide us an update with the spreads you need to pay for secured financing for 5 to 10 years into the future now?
On average, 120 basis points.
Okay. Thank you. My last question is on the CapEx outlook.
For 10 years, right?
Five to 10 years, yeah.
Yeah. Secured financing is always for 10 years, that's most economically, and here it's 120 basis points.
Okay. Thank you. The last question is on the CapEx outlook. If the going remains tough and you are not as successful with disposals as expected, by how much you think you could further cut CapEx without jeopardizing your operation performance?
Actually, to be clear, the, we have different CapEx, which is modern CapEx, maintenance we are now talking about. If you are looking on the 850, this theoretically can go down close to zero.
Mm-hmm.
This is why we are doing actually the disposals, because we think we want to come back to a phase where we can invest and do value accretive investments, right?
Mm-hmm.
Thomas, to remind you, if I look at optimized apartments, the yield on cost is in excess of 10%. If I look at our upgrade building, we are comfortably also earning our increased cost of capital for very, very good portion of our investments. It is accretive to us even in the changed environment to be to continue to invest. For us, it's really this year's discipline to get the leverage where we want to have it, to be very robust in our capital structure, to continue to, as you would say, generate and continue to generate Alpha.
Okay, thanks.
The next question comes from Rob Jones from BNP. Please go ahead.
Afternoon, team. got four questions. The first one, which I'll do them separately. recurring sales, you've said that Q1 2023 has been slow or quiet so far. You haven't cut your recurring sales guidance. I wanted to know what gives you the confidence that your remaining three quarters of this current financial year are gonna be sufficiently high enough to achieve your guidance. Thanks.
First, in Austria, the business is very stable and with very high margins, so that's why we are not concerned. In Germany, to be very precise, the first quarter, mainly January and February, especially January, was very weak like December. We are seeing in the moment the number of reservations and trades are going up, which is in line with what Philipp has said, that the values seems to be stabilized.
Okay, great. next one on the-
One addition is, in the moment, as I said before, there is a difference between in the apartments if vacant or not vacant, because it's two different target groups.
Sure.
The ones which are not vacant are actually institutional small investors. There the market is different. For every vacant apartment, seeing the housing crisis in the big cities, it is relatively easy because it's the cheapest way to live in a big city at the moment, to buy an apartment from us. That's why it is also a function of how much vacancy we can generate in this portfolio.
Very clear. Secondly, on the bribery allegations. We had LEG saying that they'd had an increase in cost of funding around that date, when they were looking at doing some private placement. Have you seen any higher cost of financing that could potentially be linked to that? Secondly, on that topic, can you disclose the number of former employees involved? In my head, I'd like to see a scenario where it was the number of employees, I'd be able to count on one hand, and they were known to each other, and therefore the cases at this stage from your initial understanding could be potentially relatively isolated. Thanks.
Look, I mean, I think we've been clear in that we do a very comprehensive investigation, and based on the results, we disclose details. To add some color, I mean, in terms of financing, given it was last Tuesday, there was not that much of financing we did, meanwhile, except for the EUR 550 million secured loan, and that had no impact whatsoever. I gave a call to the CEOs of both banks, and they have been fairly relaxed. Let me add some additional somewhat technical note on that. You know, for this year, for the first time, we had to report under the EU taxonomy rules.
Here we had to disclose also our OpEx, CapEx revenues, which are considered green and which at the same time are in line with the do no significant harm qualifier. You can expect our auditors to have a very, very close look, given that they had to issue a review opinion that this is by no means material in order for them to issue the opinion. As you can see in our audited, and that is including the non-financial declaration, we have received not only the audit, but also the review opinion for the EU taxonomy disclosure.
Okay. The third question was on developments. I see in one of the slides you're now holding them at cost rather than fair value. I'm not the master of IFRS 13 unfortunately anymore. Can you just remind me as to why from an accounting perspective that's the case? If values fell again, does that mean that that component of your portfolio wouldn't see a reduction in value because it's just still held at historic cost?
It's somewhat different. Historically, Vonovia was always accounting for developments at cost. What was somewhat different is that in context of the purchase price allocation we did when acquiring Deutsche Wohnen, we had to assign to the Deutsche Wohnen developments the respective fair values, which are different from the cost method. That obviously make that portion of the portfolio far more vulnerable against changes in the market environment, which is why if I look at the valuation result, the EUR 450 million depreciation we have seen refers predominantly to the Deutsche Wohnen portfolio. For the old Vonovia portfolio, if you will, it's, if at all, eating into the margin, but not into the valuation at cost.
Okay. Understood. another one, Philip, was, I remember, and maybe now I'm thinking this may have been a dream, but I remember, someone telling me that the nursing homes portfolio was of high likelihood to get sold in H1 2023, or even Q1 2023. It feels like it's gotten a little bit quieter on that. Is that because potential suitors have walked away, or is it just because you weren't happy with pricing, or maybe the answer is you can't comment at this stage?
I think it is very clear it is a decision of Deutsche Wohnen to be formally right. I think we have made in our speech very clear that we support the Deutsche Wohnen by selling this asset, but we think it should be for the right price. We have seen a big transaction in France, which gives you a feeling of the price level you can achieve for this type of assets.
Okay. Fine. I've got more questions. I'll ask Rene offline. Thank you very much, team.
The next question comes from Paul May from Barclays. Your question please.
Hi, everyone. I've got, probably three questions I think. First one, can you explain or talk me through how your discount rates are unchanged year-on-year in your valuation parameters? Just given everything that's happened with the cost of capital, it seems a bit illogical. I just wonder what your theories are on that thinking.
Yeah. Paul, I agree. That is because this time, for the first time, we are looking at the combination of the valuation we did not only for the Vonovia portfolio, but also for the Deutsche Wohnen portfolio. The respective outcome was very similar for both portfolio portions, if you will. The underlying assumptions were different is how Deutsche Wohnen and now in the combined approach, Vonovia has valued the Deutsche Wohnen bit. That's why a long way in saying that the comparison 2021 to 2022 is not a good comparison. It's distorted by the integration.
Okay. Just to check on that. I think you give the combination in the annual report this year around, so you combined Deutsche Wohnen and Vonovia. Are you saying that the combination in the 2021 numbers is wrong or is not looked at in the same way as 2022, just to be clear?
No, 20, 2021 is essentially the parameters for Vonovia portfolio. 2022 are the parameters for the combined Deutsche Wohnen and Vonovia portfolio. That's why the numbers, if you compare A with B, is somewhat distorted.
You have more Berlin in it. A higher portion of Berlin than in the Vonovia portfolio.
I appreciate that. Just as I say, in this set of results, you've got the combined in both. We can do that one offline. That's fine. We can go through that. Just wanted to check. The average sales price of privatizations in Q4, I'm calculating at around EUR 165,000 versus EUR 221,000 average price for the first 9 months. Is there anything we should read into that? Has sales prices either come down materially or is it just you're selling different types of units? Is there just more demand for lower value units? Just wonder what the, what the changes were there versus the, you know, the Q4 versus the 9 months.
I think the last is right. This is a mixture of apartments that we are selling and sometimes you are doing some packages which is more obviously used more for the less quality.
Cool. Thank you. The last one, which is sort of combined, I think. You mentioned early on a question around the scrip dividend saying that it wasn't dilutive. I think in Q3 you specifically said it would be dilutive and that's why you wouldn't do it. Just looking at the transcript. I just wonder what the thinking has changed there? If it's now considered to be not dilutive, a rights issue is by its very nature, not dilutive either. I just wonder what the theory is behind why you're not or writing off a rights issue, but happy to do a scrip if either one is not dilutive in your thinking?
Yeah. Look, Paul, I'm kind of repeating myself. It's striking the balance between offering a dividend, in order to also safeguard our cost of equity. At the same time, have capital discipline, and preserve as much cash within the company as possible. From what we heard from our shareholders, that was the best compromise to strike, which we are offering our shareholders for approval in our upcoming AGM. Not much more color I can give around that.
Okay. Thank you. Just, I mean, bringing all that together, obviously, market reaction today and debate whether it's the market or whether it's the reaction to the decision. It's clearly telling you something different from what you're saying with regards to the market reaction. I think Rolf, in your opening comments, you mentioned it's dangerous to sort of not look at market forces and to ignore market forces. I just wondered at what point does it change and you think actually maybe the market is right and maybe a different strategy is needed? Just wondered if there are any thoughts on that. Thank you.
Well, I think it is clear our, we still and I think we are also supported by a lot of shareholders saying, management team has to provide, the business, have to provide the KPIs. I think it is clearly said also if you look on all different companies that there is, This is probably more macro, than the specific effect of Vonovia. I think our major task is to make sure, that all stakeholders are actually considered in our, strategy and in our doing and that we deliver the KPIs. I cannot fight against macro trends.
Cool. Thank you very much.
Next question comes from Andres Toome from Green Street. Please go ahead.
Hi, good afternoon. I'll go one by one as well. First one is on disposals. You have more than EUR 2 billion in the bridge there for this year. I'm just wondering how much of that you have already signed and what sort of pricing levels are you seeing for that?
You, you know we are clear. We don't need higher sales, that's why it must be around somewhere around fair value. Of course, dependent on the different sales channels. I cannot repeat more. I cannot do more than repeat. We are in good negotiations for a significant part, and we do not disclose any LOIs on what we are doing, that's why you will hear if we sign and close.
Okay. Right now it's zero, but you're close to signing potentially on many deals. Is that the right way to read it?
We are in the middle of March. Until the end of the year is a long period, right? We are saying we're doing the EUR 2 billion in the end of the year, not in the first quarter.
Got it. Got it. Got it. Understood. Then you've been on the market with several larger portfolios as well over the last sort of six to nine months. You know, obviously you haven't sold a big portfolio. I'm just wondering where have the bids come in and where would be the sort of the line for you to pull the trigger? Would that be the December 2022 reported values?
Look, Toome, I mean, if you are in ongoing M&A discussions, I think the worst you can do is to guide the outside world as to how negotiations, and in particular, how pricing discussions are going on. I think it's in your utmost interest that we don't disclose these kind of details to secure a good outcome. Please take our commitment that we do have a number of initiatives negotiations going on, and that based on the discussions we are having, that there's a high degree of confidence that we will achieve the EUR 2 billion, by the way, 2% of our balance sheet, and that is what we are targeting for this year. It's getting nowhere because we cannot provide and will not provide, for technical reasons, any additional details at this stage.
My last question was just around page nine of your presentation, where you do those stress tests. The unencumbered asset ratio, what exactly are you assuming there? Because you're saying 20% decline in values by End of 2024. That by itself would knock down that ratio probably around 125%. What are the offsetting effects that are bringing it back to sort of same level where you are today?
Yeah. You're comparing... I mean, it's a relative measurement. If you have a significant value decline, the encumbered and the unencumbered portion should go down by the same magnitude. By definition, a value decline is not impacting that ratio. What is impacting that ratio is if you change the mix between secured and unsecured.
Sorry, but your numerator is the asset side, but the denominator is the debt side, which presumably doesn't move by that very reason of asset values going down.
Unencumbered assets and denominator is not the debt side.
It's a ratio.
It's a ratio. We can take that offline. Yeah. We can take it offline, you have a definition in the back of your presentation where you show that formula, unencumbered assets divided by unsecured debt. We can take it offline. All right. That's it for me.
The next question comes from Jaap Kuin from Kempen. Please go ahead.
Hi, good afternoon. Yeah, I was hoping to get a bit more details about the guidance. I think you've sufficiently indicated that the downside to the earlier statements is caused by more cautious stance towards development to sell profits and recurring sales profits. If I look in the numbers for 2022, the total amount included in FFO is around EUR 225 million, which almost coincides with the lower amounts at the low end of the guidance. Would you be able to confirm and break into steps exactly how you see the low end of the guidance? For example, does this mean you assume absolutely zero contribution from these two segments in FFO?
I mean, let me start that way. It's not that we are assuming zero contribution from recurring sales and or our development to sell business. If I were to guide for a number, by which Group FFO were to be impacted, if in fact, we are selling zero, it's not far away from that number. Of EUR 250.
Okay. To my understanding, there must be, maybe, please tell me if I'm wrong, there must be 80%-90% of that number at least, because you highlighted that basically the downside to FFO was not caused by anything else.
It's very clear, just to do the recurring sales. In the moment, we are doing a margin of 25%. If we decide not to do a margin, then the average is gone. Right? This has an impact on FFO. We are still selling for book value, but without the margin, that's why the EBIT is gone, and this has an impact on the guidance.
Yeah. Of course. My point being that if the delta versus this year, could be EUR 250 million, that's the full amount of the contribution of this year, hence there's no room for anything else.
This means actually, if you're doing this calculation, it's too rough. In principle, if you're doing it, this says that we are all selling everything for book value.
Yeah. Correct. Yeah. All right. Thanks. My second question is, you're cutting on modernization CapEx. If you think about kind of lead times in modernization projects being 2 to 3 years, could you maybe confirm that and explain how you see that working through in like for like growth going forward? Is that correct to expect that actually the cutting in CapEx last year and this year has almost no impact on like for like in 2023?
No, no.
You know, we are doing more or less. The, the CapEx is of course, the modernization is actually two things, which is to optimize apartment, and there you're doing the CapEx. The moment the apartment is empty and 2 months later you get the increased rent because you're reletting the apartment. This is a short term for the modernization. For the energetic modernization, you know, we are doing a plan over summer. In the Q3 we are normally giving you an indication for the next program, and then we start to do the modernization in the next program. Of course, there is a small overlap to then, for example, if we start a new hire program in 2024, there will be a small overlap into 2025. This is not meaningful.
This also depends on the combination, how much energetic modernization optimized apartment we are doing. To be very clear, with an above 10% yield in optimized apartments, this is a very attractive investment. As soon as we have finished our capital discipline period, saying, so we are now focusing this year on delevering, I think then assuming that we achieve the EUR 2 billion of disposals this year, I think you will see a normal investment program coming back in 2024. Without giving you any guidance here, but this is at least, if you follow our strategy and what we have said is obviously what you can read in this.
We have this next question from Marios Pastou from Société Générale. Please go ahead.
Hi. Good afternoon. Thanks for taking my question. 2 questions from my side. Firstly, just back on guidance, can you just walk us through the point you made on the disposals outside of, say, the recurring sales business don't impact guidance. Surely the timing of disposals, and the timing of debt refinancing do have an impact. If you could just maybe take us through some of the parameters there included, that'd be very handy.
Sorry, Could you repeat the question? It was very hard. You were somewhat breaking out. I didn't quite get your question.
Apologies. I'll try again. I'll speak a bit louder. In terms of your guidance, I know you mentioned that other disposals outside of your, say, your recurring sales and your, and your development business don't impact on guidance. I just wanted to check. Surely the timing of disposals is pretty crucial on the confirmation of your guidance. Any parameters around there would be very useful for a bit more understanding.
Yeah, I mean, it has no, it has no direct impact on EBITDA and Group FFO. It has some indirect impact in that we will obviously use the proceeds of our disposals outside recurring sales and development to delever the balance sheet. That allows us to save interest expenses. It's not, it's not the most meaningful number given that what we redeem is debt which is currently bearing interest of 1.5 percentage points. If you do the math, it's not, it's not moving the needle too much.
To be clear on the other side, if you are selling buildings now, you are losing the revenues and the EBITDA of those buildings immediately.
If you would, in the other extreme, sell everything in December, you would have of course a positive impact on your, on your top line because you still have the whole EBITDA and FFO contribution of those buildings. We are not doing this. This is not striking our strategy for sales, but this is just to explain you the mechanic.
Okay. Very helpful. Thank you. In essence, we should assume disposals later in the year under that rhetoric.
No, no. We are not saying this. We are saying we are doing the disposals when it's finished and negotiated. I just wanted to explain you the mechanic. If we are doing a lot of this, if we would do a lot of disposals now in March, we would have a lot of surplus cash, which is then lying on the bank account before we have to repay the debt, which is normally maturing in December. We would have a negative impact because we are losing the rental contribution and we have no contribution from debt reduction. This is just to explain you the technique. This is not driving the business. The business is driven by doing sales.
If the price is right, we are signing and closing as soon as possible. On the other hand, we have to repay back debt when they are due.
Very useful. Just secondly on your value add segment, on slide 15, how have you seen the environment as you've come into the start of this year? Should we expect a bit more stability on the margin side of things or be it offset with your reduced investment volumes? How should we see 2023 going forward?
No. I think what is clear is in the moment with the less investment, our insourcing ratio goes up, which is in normally positive. We also see that COVID is now impacting less, so we have a high, much lower illness rate at the moment than we used to have in the last year. This is just a COVID effect. I think we will see a stabilization in the value add segment.
Very clear. Thank you very much.
Next question comes from Marc Mozzi from Bank of America. Your question, please.
Thank you. Thank you everyone, taking my question. I just wanted to be back on your slide seven, just to start with. I'm right to read that if we were to remove, as everyone's been mentioning, all the contribution from asset privatization and development to sale, actually your operating free cash flow for 2023, of EUR 2 billion in that slide should be equal to zero, if I'm correct? Is there another way to look at it, because I'm missing something here.
Sorry. I mean, if you're referring to recurring sales, which is netted versus-
No, no.
Capital statements.
Yeah. You start from your EUR 1.85 FFO contribution this year.
Yeah.
If you remove all the contribution of 2022 from asset sales, privatization and development to sale, then you end up with a free cash flow at 0 before dividend, obviously. What I mean here is everyone's been focusing on those two items from the beginning of this call, just because it looks like that everything we're discussing here about deleveraging, covering the dividend, is all about disposals. Either privatization, development or non-core money. Then on top the EUR 2 billion you indicated.
Yeah. Yeah. Marc, look, I mean, A, I think it's highly unlikely that we'll not be doing recurring sales business because it has the slow start, but it's actually happening. Second, you're deducting the entire portfolio investments. Those are those ones, just as a reminder, who are yielding additional rental income. By making that statement, you imply that these investments deserve 100% equity financing, which I think is not the reality. If you assume and apply kind of our capital structure on the portfolio investment of, let's say 40% debt and 60% equity to be on the very conservative side, the math still works, right?
Yeah. Maybe I'm not sure I'm with you on the leverage here. I was just trying to find out the amount of cash you're capable to generate and the. My conclusion is it's entirely relying on disposals, whatever the type of disposal develops. Maybe we can discuss that offline. I'm surely missing something here.
Marc, again, I mean, if you are doing an investment which is yielding additional rental income, I think it's simply not right to assume that this needs to be 100% equity backed. This is outside reality. If I look at the profile and let's just return to kind of a normalized environment, if I look at the FFO post-dividend, the Group FFO post-dividend, what is remaining in terms of what we can invest is allowing us to significantly step up the investment volume so far in excess of EUR 850 million we are stating here, if you assume a typical financing of these investments in line with our Capital Structure .
I think this is the right way to look at it.
Okay. Thank you. Get it. My second question is around what is currently the ongoing outstanding volume of construction currently on site in your terms? What is the remaining amount of money for your development to sell? I mean, here specifically. The amount of money you need to spend just to complete the buildings which are on site.
I mean, what we have currently deployed in terms of capital is roughly EUR 3.5 billion for this year in order to complete roughly 3,000 units. An additional EUR 350 million is required. This is what we have earmarked for the running year in order to complete. I think we have not given any guidance as to what our additional investment volume we currently envisage for 2024.
It will be very not meaningful anymore because we have decided in, I think back in 2022, not to start any new construction. This is just the volume which is now going down. It is a clear commitment that the capital exposure of the development business is not increasing. For the development business, very simple. They sell buildings and then they can use the money to start new construction or they do not start new construction.
If I'm reading you correctly here, you have EUR 3.5 billion, which is committed. You only need EUR 350 million, so less than 10% just to complete those EUR 303.5 billion. That's the way I should read it. Or you're pre-selling everything 100% up front, so you get 100% of the cash up front and then you go for the construction.
You are saying we are not starting new construction at the moment. This is what is happening, but since a longer time now. So there is a remaining peak, which just Philip has said, in the EUR 850 million, there's EUR 350 million of standing of buildings in 2023 to finish them. There is a much smaller portion because it's logic, it's getting less and less for construction in 2024. Before we start new construction, the development business, Daniel has to sell other buildings to get cash in. Right? This is not consuming cash anymore, of course, to give you options, there is thousands of options. We own land, we own everything.
I am sure that Daniel will sell something that he can continue to build because he would like to build. From our perspective, it's very clear there will be no more exposure than what we have committed here.
Yeah. I'm just trying to understand. From what I understand from the house building business, there's been a literal impression from our side, there is this disconnection between, on the one side, because of huge construction, you have started a building. Whatever the level of sales, you need to. You will complete it, you will not wait for people to pay you before you finish the building and you complete the building. There is somehow, somewhere a cash drag from the, from new constructions, which I'm not sure I'm able to capture here. We can also potentially discuss that offline.
It's very simple. To be very clear, there is no more money coming from Vonovia to the development business. It's very simple. Except the EUR 350 million which we are spending. That's why he cannot order any more construction. He will sell because he has a lot of assets which he can sell. He will generate his own cash, and that's it. We can go in more detail, but it's very simple. For the rental business and for the old business, it's not meaningful. I understand if you're a standalone developer, then actually your business, if you don't sell, the business is dead.
Okay. That's just what I wanted to make clear. Okay, brilliant. Thank you very much. That's it for me.
The next question comes from Thomas Rothaeusler from Deutsche Bank. Please go ahead.
Good afternoon, everybody. I've got a few questions. The first one is on leverage. You are currently at 45% LTV, but you target to get closer to 40%. Can you describe the major steps to get there and especially the timeframe and specifically on the back of headwinds from lower property values? I mean, if we assume the 10% value cut you referred to, I mean, you would need basically billions of disposal proceeds just to keep the LTV stable.
Thomas, just one remark. If you now assume that the 10% is our assumption for the value cut, I think you have to please keep in mind that we have said this is a stress test. As a scenario, it's not what we are assuming. Just to make clear that it's everything clear for everybody here. This is not an assumption. This is not a guidance. This is just the basic impact of our stress test. With this, I hand over to Philip to answer the question. Just to make sure that we are not assuming a 10%+ 10% value downturn.
Look, Thomas, I mean, it's fairly simply math. If we de-lever by EUR 2 billion, that obviously has a positive impact on LTV. If we were to assume that we have additional value decline, which is not being compensated by growth in rents, we see that impact will be reduced or will go away. Ultimately, it's all about assumptions you have on capital values. We're kind of going in circles now. All we can say, and what we reiterate, is that we take capital discipline serious.
That is why we have initiated a number of processes in order to free up capital, in order to reduce leverage. That is providing a buffer also in terms of our debt KPIs, if there should be additional pressure on valuations. Again, I mean, we see conflicting, if you will, developments. We have the supply-demand imbalance we have repeatedly mentioned. We see pressure on rents, and we will have to see how that will calibrate in the market, once we see more liquidity, and more investors positioning in this market, which is currently only for a very limited investor universe the case.
Okay. Thanks. One question on refinancing. As I understand, you plan to refinance the EUR 2 billion unsecured debt maturities for this year, mainly through disposal proceeds. What are your alternative options if disposals shouldn't materialize, and what is the cost for that? I assume this would require an adjustment of the guidance then, right?
If we were not able to secure the EUR 2 billion of disposals, we probably have to some extent tap the capital markets. Only to some extent, given that we have EUR 1.3 billion cash on hand already, we have secured a EUR 600 million loan from the European Investment Bank at very competitive terms, which we can draw anytime, on top of the EUR 500 million in the secured banking market. Even in that scenario, it is somewhat limited in terms of actual refinancing need for the running year. We are almost done.
With almost, I mean, the delta is roughly EUR 800 million, what we essentially need, in disposal proceeds, to be done for the running year.
EUR 800 million.
Yes.
Okay, thank you. The last one.
That ex-today and how it impacts our guidance is very much a function as to when we are doing the refinancing. I mean, given that the bigger maturity is then in December, that's probably very back-ended. I don't see this to be a key driver to our guidance for the running year.
Okay, got it. The last question is actually on CapEx and CapEx returns. I mean, if I look at rental growth from organization was only stable at 1.6%, despite much higher CapEx over recent years, actually, which might indicate to declining return on CapEx. I mean, is this the right way to look at it or do I miss something?
No, I think-
What is, what is the current level of yield on cost and, I mean on average? How did it evolve over recent years? I mean, is there any chance to get more transparency on this maybe on a regular basis would be very helpful.
It's very simple. I think we have a change, and I think we have shown you on this slide what we have done actions. We had a period before February 22 and a period after February 22. Before February 2, the costs were actually for cost for capital were going down. It was a period where we spent actually investment, where we did investment programs which were above the cost of capital at this time. That's why we did it. Now after we stopped actually all the investments and we are recalibrating now the investment based on the new normal. I think Philip has given you an indication that the part of the investment we are doing at the moment on a much lower scale is initially yielding above 10%.
I think there is a period of investment which has decided before February and these investments which are decided after February. The yield of these two groups are very different.
You referred to the 10% for the apartment invest.
Yes.
What's the other? The rest or?
Yeah, the rest is more or less stopped. That's why we are going down to EUR 500 million. That's why this is the interesting part is probably in Q series here, where we will deliver you our new investment program with new yields and new volumes. Therefore, we are working now on it. What is clear is that the old yields doesn't work in the new environment anymore.
Okay, thank you.
The next question comes from Kai Klose from Berenberg. Your question, please.
Yes, hello. Good afternoon. Two quick questions from my side. The first one is in the Group FFO calculation. We had an increase in the cash tax rate from 3.5% to 6.4%. Could you give more indication and more color on that, and what we can expect for 2023?
On cash taxes, this is predominantly because we have reduced our investment volume, this results in less tax-deductible expenses. That's why tax rate has gone up. That is one portion. The other portion is because we have increased development to sell in terms of profit contribution.
Thank you. The second question, we had around EUR 128 million of non-recurring items in 2022, which I think was mainly due to integration of Deutsche Wohnen. As is it possibly probably finished, could you give a number for the indication for 2023 or are you and/or are you planning additional or new cost savings measurement in the context of, let's say, reduced spending strategy?
The 128 is predominantly Deutsche Wohnen to a very large extent. I don't have the number on top of my head, but I think that to be a very reasonable number for the running year.
For 2023?
Very reasonable number.[crosstalk]
Let's follow up on that, Kai. I don't have it on top of my mind, which is an indication it's not meaningful.
Thanks so much.
The next question comes from Simon Stippig from Warburg Research. Please go ahead.
Good afternoon. Thanks for keeping on with the call, and taking my questions. First one would be, in regard to valuation. You had the development project revaluation to an at cost valuation within the Deutsche Wohnen portfolio. Could you please indicate, what's the gross yield of the Deutsche Wohnen development portfolio at cost when finalizing the projects? Is that roughly in line with BUWOG?
We need to come back on that. I don't have that on top of my head.
Okay. Sure. Thanks. Maybe one more in regard to valuation. The nursing portfolio, could you indicate the gross yield on the portfolio currently?
It's actually not Vonovia who is disclosing it. It has to be done by Deutsche Wohnen to be sorry. I can tell you, if you look at return on capital employed, you simply take the fair value, the depreciated fair value of the nursing business, and you look at the EBITDA contribution from the assets, plus the operations, it's translating into a yield of 7.5%.
Okay, great. That's very interesting. Just out of I know, I mean, you have to ask Deutsche Wohnen management for that, potentially not for that, but in general. If your best guess, can you see something similar with residential portfolios where you see, okay, this is energetic, efficient, and sells better into a higher price compared to what you see in the nursing home area where there's the new care reform and do you see any pricing impact?
No, I think to be very clear, this is again, it's Deutsche Wohnen. We believe, I think the new management of Deutsche Wohnen also believe, the nursing home doesn't fit to the strategy of a housing company. This is said, it's not about yields, it's said about strategy. I personally convinced, I was ever convinced that nursing is a different business, and that's why, from my point of view, also for the Deutsche Wohnen, which is dominantly a housing company, it doesn't make sense to own nursing.
Sure. That's totally understood. I just wonder how easily you can sell this portfolio, how easily Deutsche Wohnen can sell this portfolio. Given the care reform-
Yes. I give you just an indication. In France, a much bigger portfolio was actually sold for a reasonable price.
Great.
They go perform. There, of course, you have an operator and a CapEx and a OpEx and a property business, so the owner of the assets and then an operator. The problem of the nursing reform is more on the operator side, not on the asset side. If I understand correctly the business, but I'm far away from this.
Yeah, that's right. I just wonder if there's a translationary effect on the prices and yields of the portfolio or general on the nursing home portfolio. My second question will also be again on valuation and on your core portfolio. You indicated a gross yield of 3.6%. What would be the gross yield if I apply the market rent currently?
We will come back with this question. Give us a second. I think there is an indication we probably it's easier to be done. We are normally calculating in multipliers.
Yeah.
If you take the multipliers, the multiplier is going 3.5 Points down.
Thank you very much. Just one more question in regard in a reflection to November and what you indicated in November. If I look into the guidance you gave for 2023 and then looking into financing costs that has not worsened, given you or looking into your unsecured bonds and where the yield to maturity is, also there was this newspaper interview where you where given the supply-demand imbalances, It is more expected to have a stagnating development of values within the residential market. Now the guidance is what Charles indicated before, it's 9% the midpoint below. What I just try to understand is what has changed since then.
Is it predominantly the function out of the transaction market, or is there something else that has changed that, brings you to adjust the guidance downward, on an FFO basis?
Yeah. We are kind of starting repeating ourselves. On FFO, we said before, slightly below prior year. If you look at the top end range, at the top end of the range, this is the case, and skewing that towards the downside. This is a reflection of the high uncertainty we have with respect to those elements, which are sales driven and are contributing towards the Group FFO, namely development to sell and recurring sales.
Okay, great. The bigger lever would probably be the margins on your recurring sales business.
Yes. Yeah. It's always, I mean, it's always a question on how you play pricing versus liquidity in both businesses.
Sure. That's maybe one follow-up question to the recurring sales. If I look into Q4, and your Q4 margins, then they came down and everything, the recurring sales business. Is that then, also because you're not selling only to retail investors, but also maybe a couple of more units to institutional investors, and therefore you had to decrease your margin, what we have also seen before in previous quarters? Is there anything else that you, for example, had to discount your prices in that regard in Q4?
In Q4, we put more emphasis on liquidity versus pricing because we have done a tremendous job in the first nine months. Against that backdrop, all of that averaging out at a gross margin of almost 40%, and against that backdrop, in fact, in Q4 we sold quite a lot. And also compromised a bit on pricing if you look at the average gross margins we were able to gather in the first three quarters. Again, it's kind of balancing that out. I think 38% is quite a good result if we look at what has happened. Don't read too much into that.
Great. Thank you very much.
That was our last question for today, and I hand back to Rene for closing comments.
Thank you, Francine. I guess we set a new record. I'll have to go to the files, but that may have been the longest call we've had. Thanks for joining everyone. It was obviously only the start of our engagement after the results. We will be on the road quite a bit over the coming days, both in person and virtually, and we hope to see many of you live or at least on screen. You will find a list of events on page 58 of the presentation, of course, always online. As always, if there's any questions, do let us know. That's it for today. As always, stay safe, happy and healthy, and have a great day and weekend actually, everyone. Bye-bye.
Ladies and gentlemen, the conference is now concluded and you may disconnect your telephone. Thank you very much for joining and have a great weekend. Goodbye.