Hello and welcome to Peach Property Group AG FY 2024 results conference call. There will be a question-and-answer session at the end of the presentation. I will now hand over to Gerald Klinck, CEO. Please go ahead.
Yes, thank you, Lydia. Yeah, also from my side, a warm welcome to our management call here. I hope the slides will be interesting for you. I am also happy to discuss or give you answers on your question at the end. Last time, I think we had some technical issues because no Q&A popped up there. Hopefully, today we have a little bit more communication between you and us. Maybe I'll hand over to the next slide here. This is, let's say, the changes of our executive management. You see that Marcus Schmitt, our COO, left the company at the end of last year. Also, Andy Steinbauer, who was in charge for letting and sales, will leave the company at the end of March, so in a couple of days. I do not want to miss it here. Very big thanks to you guys.
Hope you're on the call here. Thank you for the effort you made to Peach, to the tenants, and employees, and also to the shareholders. Thank you for your commitment and all the best for you for your next, let's say, jobs in other functions. With that, someone is leaving. I am very happy that someone joined Peach, and that is Stefanie Koch, our new COO. Very happy to have you here beside me on the board. Stefanie joined since the 15th of March with a lot of experience in the sector and focusing on our challenges on the operational side. I am very happy to have Stefanie with me here on the board. Welcome, Stefanie. Okay, next slide. As you know, we deliver for you here two service slides, let's call it that way, to have on a glance the most important KPIs of Peach and the portfolio.
Here on the first slide, you see on the left-hand side the locations of our portfolio. The main driver which we had here last year was our big sale of more than 5,000 units closed at the end of the year, so roughly 20% of the portfolio. With that, also from cash flows went from our balance sheet. That was good for us because it was totally in line with our portfolio strategy. It delivers EUR 120 million of net cash, which we can use for that. With that, we also lost EUR 185 million of secured debt, which gives us a big step forward in the restructuring of the balance sheet. That was, I think, one of the main drivers last year. Next thing is also if you see the vacancy, and that is what I mentioned before, it was in line with our strategy.
We were able to reduce vacancy. Focus here clear on North Rhine-Westphalia with better occupancy rates than before. That's also good. I think in terms of valuation, this is what you see in the bright blue column here. Our valuation also decreased in terms of multiples. We are now in a ballpark between 16-18. If you look on actual rents or target rents, we feel comfortable with that valuation. That was these both effects, the sale and also the smaller hit here in valuation are the main drivers for our loss in 2024. Having said this, LTV also decreased, I would say, significantly on the level of almost 50%, which is good for us. For refinancing purposes, it's the right step into the right direction. With the support of our shareholders to the end of the year, we were able also to make an equity increase.
That gives us additional EUR 120 million of cash in. That is the reason why the EPRA NTA per share diluted here dramatically from EUR 47 down to EUR 20. That was an emission price of CHF 5. Switzerland. That is the reason why we see the dilution here on the EPRA NTA. That was the main driver. Yeah, put it in a nutshell. It was EUR 250 million of net cash, which jumped on our balance sheet, which was good. Portfolio is decreased, but focused on North Rhine-Westphalia with better KPIs. That gives us good opportunities to start into the year 2025 with the next challenges we have in front of us. On the next page, you will see what I mentioned before, the clear focus on North Rhine-Westphalia and also the other numbers.
I think it's good to highlight here the vacancy in strategic and in the non-strategic portfolio decreased compared to pre-transaction, which is from our side, good. With that, I move on to the next slide. What happened in 2024 so far, I think focus here was here the last three things in November and December with the EGM and the capital increase and the portfolio transaction mentioned before. In 2025, we also had some reached some milestones. We were able to get use of our EUR 240 million funds in January, and we were able to repay part of our bond, which is due in November this year, of EUR 127 million. Also the promissory notes, let's say, are gone now. We also used cash from the EUR 240 million to repay that as well.
As I mentioned, Stefanie joined us in March, and that is a little bit new here. We signed yesterday a term sheet with one of the big banks here in Germany with LBBW. I'm very happy to achieve that with my team because it gives us two things. One thing is reputation is increasing back for us. That's good because we are able to acquire a new secured financing bank. That's good. Secondly, it is a facility by EUR 120 million. The uses of that is repayment of EUR 30 million of secured existing debt, which matures in future time. We make effort here. The remaining almost EUR 90 million, we can use for further repayment of the bond, which is due in 2025 in November.
This is the next step on our, let's say, challenges on the balance sheet to bring our facilities, which are due here in future time, down here closer to zero. That's good. On the next slides, it's operational performance. I think we had a similar slide last time where we want to explain to you how the EBITDA is developing from the last date to this date here, end of 2024. I think for us, and this is key to mention, that the year 2024 was a year of a transformation for the company. We are not done, but we are, let's say, on a good track to do so on balance sheet and also on our operational performance. I think that is to mention here. That's the reason why also the EBITDA decreased from last year from 66 to 62.
We lost a little bit. The reason for that is we adjust our risks in the balance sheet, also in P&L effects, put some one-offs into it, some write-offs. That is the reason why you see in the other operating expenses here some one-offs in it. These are higher than our rent increase. That was more or less the main reason to do, let's say, why the EBITDA decreased in 2024. Still good news, and this is our rental income is on a sustainable track of increasing in line, I think, also with market and with our peers. That is, let's say, my good news or my hope also for 2025 and onwards that we are coming back on the track of operational performance for 2025 and onwards.
Next page gives you a little bit of some details of these columns which you saw before in the other slide. Before slides, here's the rental income. As I mentioned before, we are in a good situation that our rent is still increasing on a CAGR of 3.7% per year here compared to 2022. Vacancy is still high. This is the clear focus for us and also the challenge for Stefanie, the COO, together with the team to focus on vacancy reduction because that is one of our key EBITDA drivers also for future days because obviously rent is coming into our accounts, but we also lose the cost for unoccupied assets. That gives us the best yielding compared to others. That is really a main focus on it. These are the biggest drivers, as I mentioned before. This is one, I think, takeaway from this slide.
The other takeaway is still that we have a high fluctuation. The tenant improvements to spend on this fluctuation assets is linked to that. From my point of view, fluctuation should be reduced in the next time. That also we have to focus on our tenant structure. We have the tenant improvement and the CapEx for that. We want to generate from our portfolio strategy to get rid of our non-strategics and take the sales proceeds and reinvest it in our assets. Therefore, fluctuation is also a good opportunity to catch up to market rents. That gives us also good yields and good operational performance in future times. With that, I move on to the next slide where some more details on the rental potential you can see.
Let's say we have still the upside between the existing rents and the market rents by roughly 16%, which is good. We achieve that. If you see on the green column, you see our new lettings, which are in line with market rents. There is still, let's say, an upside with new lettings of 16%, which shows that we catch up to market. Unfortunately, we can't achieve that very quick. It's a process driven by fluctuation. This is something where I think the rent increase in future times is, let's say, also driven by this effect, which is also good for us. The similar situations you see in the non-strategics. Non-strategics is not, let's say, crap. It's more or less the same quality of assets which we have in the strategics. It is more driven in our non-strategics that most of them are scattered locations.
We are far away from our Peach Points. It is, let's say, not so efficient for us to maintain these assets. This is what you see later on in the vacancy as well. If you look on these non-strategic assets, it is good stuff there, but we have to focus also on asset management on the non-strategic to increase operational performance there and with also an impact on hopefully good sales prices on that. Next page. Vacancy rate decreased. The most impact was the sale of the 5,000 units where we also sold some vacant units. That is the reason why we have here a clear drop. Maybe to mention here on this slide, sometimes numbers flying around regarding vacancy. Here you have the 6.6% vacancy. That is the cutoff date at end of 2024 with our ready units.
6% of our ready units at end of the year were vacant. You saw maybe the 8.4 at the beginning of our slides. That is the whole period. If you compare the whole period of rents, which we want to collect, and the vacancy, and that is also driven by all asset classes. There is also the commercial assets in it, which is not dramatically high with us. Also parking space are included in these numbers. That is the reason why sometimes we have here different vacancy KPIs in our slides. Hopefully, it helps you a little bit by explanation regarding the difference between all of this. Key focus, as I mentioned before, for the COO and for the whole group here is the focus on the reduction of vacancy furthermore. This is what you see on the upper left or the upper right side of the slide.
Almost 270 units are ready to let out. We spend in it in these units, and they are in the letting process. Roughly a little bit less than 600 as a date of end of December, let's say, are vacant. We have to put here eyes in it and bring them back to the letting process. In terms of the non-strategics, as I mentioned before, the biggest impact on our vacancy there are the scattered units. We have to find solutions here to bring that down before going into the sales process with these assets. Okay. On the next slide, the next column was the expenses from letting. If you see, maybe the two main drivers are the repairs and maintenance and the direct administrative expenses. They went up.
Overall, we have the situation that Peach was able to almost balance that out, the higher cost and, let's say, also the savings on the other hand. There is a slight impact of a catch-up effect in the repairs and maintenance. That is the reason why we increased here slightly. Also, there is obviously the inflation and cost drivers in the past also has an impact in here. Okay. That is, let's say, together with our income streams where clear focus is on, the second focus is in cost efficiency. We also focused in 2025 in our cost efficiencies. We have clear focus on reducing costs on a day-by-day basis here and have a clear focus on it. Operational performance in line with the balance sheet measurement, which I mentioned before, is a clear, clear target for 2025, brings the cost down and brings the rents up.
Next page. Development of personnel expenses. I think one of the drivers is really the change of the executive management. Remember last year, we had, let's say, more or less two CFOs in the company. I joined the company. I think Markus left. I think we have a lot of changes at the company, which also drives costs. I think that is one of the effects in 2025 next year. We have, let's say, on the executive management, Stefanie and myself on the board. These are, I think, as was one of the main drivers in terms of salary impacts. Together with inflation, we have here a slight increase in these costs. I want to mention that also we were able to make a joint venture together with the buyer of our big sale.
We created a joint venture with a win-win-win situation for our employees because they have, let's say, work to do for future days. We have also a good on-and-off boarding process for the buyer and us. With that, we have more than 30 employees who moved on to the new buyer, which has also an impact on costs for us because these costs we never show again here in 2025. I think that was a good step forward for all of us and has an impact on 2025 numbers in terms of salary. Okay. Next page. Operational costs. I hate it, but I have to mention again. I think it's a kind of one-off. We see here some fees, expenses for third parties increased dramatically compared to 2023. That was more or less in line with the repositioning of our strategy and the company.
We do not see these costs in 2025. I am looking forward to come back to, let's say, to comparable numbers from the past. The second one is also a one-off effect of our ancillary cost billings of the year 2023, which is a write-off because this is a loss in terms of not collecting it from our tenants. Next slide. Page 17 is also a little bit of a service for you to have the operational KPIs in 2024 in one slide. I hope that helps for your analysis. With that, I am moving on to the financial performance, starting with the CapEx. CapEx is back on track. If you see the per sq m numbers in the past, we catch up with investments which are needed in our assets coming back in 2024 on normal levels.
We spent the main part of it in tenant improvement, which gives us yielding. Parts of it we will see in 2025 because it was a little bit back-ended our investments. As you maybe remember from the further slides, the 370 units which are ready to let out, we will see this impact in our numbers in 2025. Okay. With that, let's say, with the tenant improvements, yielding, as I mentioned, in terms of vacancy reduction, the second thing is catch-up to market rents. Next page. Portfolio valuation. We think that the devaluation reached bottom line. There was a slight decrease in terms of valuation compared to last year. This gives us 2% together with the CapEx, which are not covered then by this effect. It's a little bit of 4% loss in terms of valuation.
We think that we are now on the bottom, reached the bottom, as I mentioned at the beginning of the presentation. The impacts for 2022 and 2023 are the external impacts or impacts, as we all know and what we see in the industry here, together with our peers. If you look on value per sq m, we are in the ballpark of EUR 1,300 per sq m. I think that is not the lowest in the sector, but on a very low basis. Also, as we all know, costs of new construction are even higher. We feel comfortable with this valuation. In terms of multiple, as I mentioned before, multiple of 16 on target and 18 on actual rents gives us, I think, a good position today that we do not see some further devaluation from today's perspective further on. Next page. This is a debt structure.
I think one of the most important ones, together with the operational performance, is to look on our debt structure. What we achieved, you see there here on the left-hand side in 2025, the promissory notes and parts of the unsecured bond is away now. That was good. The green one is left. The green one here, which is left, is roughly EUR 173 million. Together with the LBBW new facilities, that will decrease on a level of in the ballpark of EUR 80 million-85 million, which is good. The unsecured bond is on a good way, on a good track to be totally refinanced at the end of the year. Secondly, you see a little bit more than EUR 200 million of our secured debt. We are in contact to the banks who are delivering that. We had a good response on that.
The LTV or the debt there is more or less in the ballpark of 8-9 times. That is, let's say, the risk, let's put it that way, is limited that we are not able to refinance it to extend it. At the moment, this is our best assumption that we come together with these banks and have an extension of these secured lending further on. We have a look on our smooth maturity profile. You can expect that we split maybe the EUR 200 million and split it over the next, I would say, four to six years. Having said this, loan-to-value is significantly reduced. We come to that on the guidance a little bit later on. At the moment, I feel better than last year with the LTV, but we are not there where we want to position Peach in the midterm basis.
The LTV should be further decreased. I think all the other numbers are in line with expectation. In terms of debt-to-EBITDA multiple, we are closely to 19 at the moment. This is still too high. With operational performance in the next years, I would say in the next one to three years and further decrease regarding regular amortization, we are heading here into the direction of a multiple of 15-14 further onwards with ISCR levels above 180. That gives me here the possibility to come back with Peach in the secured market with 100% of our debt. This is where we want to position Peach in midterm time to go back to the secured financing because cost of capital in that sector is even more attractive compared to the unsecured market at the moment. Next page.
As I mentioned before with the operational KPIs, we have here the overview of all our financial KPIs in 2024. Update on ESG. I think very important stuff also for all of us in the sector. We will release our sustainability report in May this year. We are good on track on that. In terms of our, let's say, rating category here, we are in gold. We changed Sustainalytics to CDP and also get a good rating. I think the B rating is the best what you can get from CDP. We are totally on track with our transparency and our disclosures here. We feel comfortable on that. Showing the next slide, we are still here on a track of the decarbonization path here for Peach. There is something to do in the future. At the moment, we feel good on that.
We have to focus on ESG and CapEx to spend in there, which also gives us not only a decarbonization, but also gives us yielding on that. We are focusing on that strategy. Come up later in the year with formal details here on that. At the moment, we feel good. We are a little bit ahead of our targets, which we set up in 2021 with the 27 compared to 30, which is good. There is still a way to go. On the left-hand side, you see the structure of our portfolio. I think hopefully we can achieve that a little bit better to move more to the left side of that graph here. If I compare that with the German average, we are sliding the same picture like Germany.
Yes, we have to do something, but we are not feeling that we are so under pressure, which maybe one or the other from outside thinks that Peach has to invest so much or so many CapEx in our assets. We are more or less in line with our peers. In terms of tenant satisfaction, we are still on a high level. We're proud of that. Also, our teams on the Peach Points, which is a decentralized structure, make a good job on this and keep tenant satisfaction on a high level. Having said this, coming to guidance and for the year 2025, like-for-like rental growth should be higher than 4%, which I think is achievable. It is ambitious, but it is achievable. In terms of FFO, it's an EUR 18 million-20 million of FFO.
I think that number maybe can change a little bit because, as we all know, there's a remaining path of financing that's in front of us. Interest rates or interest expenses is one of the key drivers also in FFO. It can change maybe here a little bit, but I think in that range of 18-20, still a little bit of a higher number with a smaller portfolio, I think should be achievable. In terms of LTV midterm targets, I think we should position Peach lower than 45%. Better for me is more or less the EBITDA debt multiple, which I mentioned before. We should achieve multiples more on a basis of 13-14 times, which brings us closer to the secured market. In terms of vacancy on rent in midterm section, it's a 3%. I think that is a clear target for us.
That's what we pointed out here. If you look on the vacancy and the strategic portfolio and knowing that we want to sell non-strategics, it is, I think, not unrealistic to point out here this vacancy on rent in midterm targets. What are our key milestones for 2025? The first ones are still focusing on the balance sheets. There's still some remaining piece of debt in the bond, and we have to execute the term sheet here with LBBW. This is a clear focus on that. We're also focusing in 2025 to consider solutions for the convertible bond, which is the last unsecured piece in the balance sheet in 2026. With the balance sheet, the second big part is our operational performance. I mentioned that so many times here in the presentation, focus on operational performance and increase efficiency on the platform.
With that, we need the money to spend CapEx, and therefore we have to execute our sales strategy and get rid of our non-strategics. We have to start. We started it here in this year, and we think that we can also talk about some success in shorter future times on more sales on the non-strategics. With all of that, I hope that this success will be reflected in the share price. At the moment, share price is moving in the wrong direction. We have a high dilution to NTA, and I hope that we can be successful the same as last year, and that this will be reflected in the share price this year.
With that, I'm done with my presentation. We have some other slides here in the back to show where, let's say, numbers are in details. We put in here also some comments. This is something for homework and for services for you. I am happy to answer now your questions. If you have any, let me know. Thank you.
All right. Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you do wish to ask an audio question, please press star one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing star two to cancel. Once again, please press star one to register for a question. We will pause for just a moment to compile the Q&A roster. Our first question comes from the line of Thomas Neuhold with Kepler Cheuvreux, please go ahead.
Yes. Good morning. Thanks a lot for the presentation. I am taking my questions. I have several ones, so I suggest to take them one by one. The first one is a top-down question on the potential impact on the huge fiscal packages Germany wants to spend over the next couple of years on the resi sector and on Peach, and particularly what expectation is, what impact on interest rates this package can have, and if you also see the risk of higher cost inflation because a lot of the CapEx are planned to go into infrastructure. Obviously, there's a lack of skilled people there. I was wondering what your thoughts are.
Hi, Thomas. Thanks for the question. I don't know if I really catch everything what you're asking here, but I think it was a question of what will be the impact on these big debt things that come from the political side. From my point of view, from my point of view, and this is what we saw in the past, the interest rates went up because if people come to markets and ask for new debt, and these are the estates, then the price for this product is going up, and that was the interest. I think it's 50 basis points over two weeks' time, and you saw also the impacts on the share prices.
We are impacted as the others as well. I hope a little bit that this is, let's say, a kind of—how can I say that?—that we come back to a normal level again so that we have maybe, let's say, a little bit of a recovering of the interest rates. We all know that the real estate sector is very linked to the coupons, to the interest rates, and we see the impact. Does it impact us in our operational business? I don't think so. In terms of CapEx, if you are asking for, let's say, infrastructure measurements, that could be the case that our construction costs are also increasing.
We are not in the business of building new assets, so it's not really an impact so deeply with us. If we are going into our tenant improvements, maybe that has also slightly impact also in line with inflation. Interest, yes, but we are, let's say, as you see our smooth portfolio profile, we will have maybe an impact on the unsecured, on the secured ones, the EUR 200 million, which is still, I think, in the ballpark of below 5%. We have that impact on the remaining piece of the bond, which is more or less, if I count everything together, roughly a quarter of our debt, which has at the moment an impact on actual interest. That brings the average of interest slightly above the levels which we have at the moment.
Thank you. The next question is on your non-core portfolio. Can you give us an update where you stand on potential new disposals, and can you also comment on if the recent tightening of the rates had any impact on demand and pricing of potential disposals?
Yeah, it's a good question. With the buyer of the bigger portfolio last year, we are contacting to clean up some assets which are in the surroundings of that location. That is close to Helmstedt, that is close to Kaiserslautern. That is roughly a number of something between 300 and 600 units. We are close to them because we learned a lot from our negotiation last year. We can copy a little bit our contracts and hopefully have here a quick success in cleaning up the portfolio. This is one piece. The second thing is we set up here a new team because the sales team was not really set up for such kind of a huge release of assets of the company.
We are preparing ourselves regarding data room and so on. We are, at the moment, with the first investors in contact with smaller packages. You can't expect something that we sell 1,000 units in one piece. It is more a piece-by-piece sale with sizes of, I would say, 50 to 100 units each. It is, let's say, a little bit of a smaller sales process, which takes us a little bit longer, I think, one to three years to release all of our assets here. We do not feel really under pressure. On the other hand, we also know that we also want to get the releases to finance our CapEx measurements over time.
Yeah, understood. The next question is on the portfolio valuation. Firstly, can you remind us, please, what the peak-to-trough write-down or revaluation was on the current portfolio? Your portfolio yield in terms of acronym initial yield is still relatively low at 3.7%. You said you do not expect more pressure on valuation. I was wondering if you can elaborate a little bit more in detail why you're confident that there is no pressure on absolute portfolio values. Just to follow up on that, is it possible that the relations stay stable and that we see a further yield expansion this year depending on how interest rates, if they work going forward?
Look, let's say if there's really an external market impact, which impacts all of us here and the peers, then it could be the case that further devaluation can take place in future times. I think then we have to look on external impacts, which we are not aware of at the moment. This is something I think I feel comfortable to compare us also with the peers. If you look on, let's say, also on the EUR per sq m number, it's a very low number.
If you see that we are, let's say, behind the peers regarding our average rent per sq m, this is also not as big as in others. There is not really a big risk that we are not able to place our assets rightly in the market. Having said this, based on target rent, we are at 16, multiple of 16. Let's say together with the TI and with focus on operational performance, I think we can close this gap not shortly, but in the next one to two years to be on a level then on the multiple of 16. I feel comfortable with that.
Okay. On the peak-to-through valuation?
On the what? Sorry.
At the peak-to-through revaluation losses you experienced from H1 2022 to end of 2024, if you have the figure on top of your mind? How much went the valuation down in the portfolio?
I'm not sure if I really captured your question. It was a percentage of 2% compared end of last year to end of 2024.
If you look at the peak valuation in H1 2022, by how much did valuations decline compared to that level? If you have the figure.
To be honest, I do not have that in front of me, but if you want to bring that up.
No worries.
We can follow up. Yeah. We can follow up maybe.
Yeah, sure. The next question is on your profitability. I mean, your EBIT margin was 60%. You're targeting 60%. Your EPRA cost ratio was at 54%, almost, which seems quite high. Obviously, you said you plan to increase rent significantly and bring down costs going forward. I was wondering if you can provide more details on, firstly, by how much you plan to cut costs in 2025 and in the midterm, and potentially also when do you expect to reach the 60% target?
Maybe a couple of comments on that. First is in terms of EBITDA margin and running a platform like Peach, if you're in a listed sector, our portfolio is too small. That's one thing. Because the platform costs us, let's say, compared to other platforms, maybe more or less the same, but we do not have the scaling impacts like the others. This is one thing if you compare us. Secondly, our income stream compared to others is also a little bit too small. Our average rent of EUR 640, there is still some headroom also compared to others. It's too low, so we have to increase our rent.
That is one thing. Secondly, we have to look on our cost efficiencies. This is a clear focus on 2025 onwards to bring costs down to increase rent. That will help us on the margin. There is a negative impact on if you're only looking on margins, if you get rid of your non-strategics, you also get rid of income. That is cutting into the same impact we mentioned before, which is positive. That is a negative impact. Let's say if we are talking about we do not talk about growth at this stage, but we have to talk about growth if we want to increase significantly our EBITDA margin. That is linked to scaling impacts, and that is linked to size.
What we can do as a management, as a company here, is to focus what is in our hands to increase the rent levels and to bring costs down as low as we can. I expect without growth that we are more or less stable on this margin. As I mentioned before, positive impacts bring rents up and costs down, but also get rid of non-strategics where we also lose top line. In terms of timing, probably, if you want to comment, by when do you think this 60% EBITDA target margin is achievable? If everything looks good. I would say it is a midterm guidance in line with also the other midterm guidance which we have in the deck here. I would say something in the ballpark of three to four years.
Okay. Thanks a lot. My last question is on your guidance. I was just wondering, this EUR 18 million-20 million FFO guidance, which amount of disposals you have included here? Am I correct if we use the current number of shares outstanding that translates in roughly EUR 0.79-0.80 on a per-share basis, this FFO guidance of EUR 18 million-20 million?
Look, we have this joint venture, which I mentioned before with GTC, where we pass on 30 people. There we can get rid of, let's say, some fixed costs that they want. That's one thing. We also support them with other services on the holding side, so with accounting, with rent collection, and so on. Therefore, we have some income fees for 2025 to maintain still the five units which are went out. That's an income stream for 2025, which has not really the impact that you lose top line and do not lose costs. That is one thing which drives FFO in 2025. The other thing is that we modeled, budgeted 25% of our sales, non-strategics for the half year. You only have a half-year impact on losing rents on that. With that, we come to the assumption that the guidance of EUR 18 million-EUR 20 million is comfortable for you and also for us.
Okay. Thank you. On a per-share basis, is the figure correct I gave you? EUR 0.79-EUR 0.80.
That is at the moment. The shares we have at the moment, obviously, let's say we have to consider if equity is needed or not. At the moment, I think we would buy our own. If, let's say, shareholders treat us different, then obviously the size of shares can change. At the moment, I think we can do it by our own.
Okay. Understood. Thanks a lot.
All right. Thank you. Your next question comes from the line of Aidan Bolton with Columbia Threadneedle. Please go ahead.
Hi. Can you hear me?
Yep.
Perfect. Thank you. I have two questions. Some of them just follow up on what Thomas has asked. I'll just start with the first relates to costs and expenses. Obviously, that EPRA Cost Ratio is quite high, in excess of 50%. When I dig down, I look at the management remuneration this year roughly represents 20% of FFO. Now, I appreciate there's restricted stock units in there. If I exclude that, I'm closer to 15% kind of ballpark. How should I think about that going forward in terms of modeling? How should I think about those restricted stock units as well as I model in 2025? That's the first. Yeah.
I think if you're looking on what we're losing from our target rents, right, then it's almost in the ballpark of 20% because there is, let's say, the vacancy based on rents in the ballpark of 10%. And then we also lost a lot of money due to collection risk and that the ancillary costs are not paid by the tenant. I think a big part of that is going away because it is linked to the path to 2023. I think we have in 2024 a similar but not as high as compared to 2023 regarding ancillary costs and rent collection. Also, the reduction of vacancy, as I mentioned before, should give us a better outcome here for these cost ratios. In terms of repairs and maintenance, I think we are on a, from my point of view, from a high level, on a high level.
Do I see here really some savings? That will be hard because 50% of our repairs and maintenance is linked to a service provider where we do not have really an impact right now on this. The other things are smaller damages which we can take care of. It will be hard really to decrease the repairs and maintenance. In terms of the other costs of share-based remuneration, that is more or less also linked to my contract, one-off effect, because you have to show these numbers more or less in one year, but it is more linked to three years. We do not have next year again. In terms of further personnel costs and other cost efficiencies, what I mentioned before, I see really here savings in salary, maybe the one or the other, because we are streamlined and that.
Costs for third parties, for external ones, for, let's say, for IT and so on, I think there is a little bit of headroom where we can be successful in reducing it further on. For me, it's a little bit too early to give you here a clear guidance because the focus was in 2024 to 100% to the balance sheet and repair it. In 2025, we are looking on all these costs. I totally understand your question, but it's a more general answer here to your question and not a specific one. We will take that up in our next call, definitely.
Okay. Clear. That's helpful. In summary, kind of flat-ish remuneration costs, FFO, as you've guided, obviously on a per-share basis, to Thomas's question, it implies that it's down. I appreciate there's no guidance there. That's helpful. The second follows up on another question Thomas had just relating to net initial yield and your 3.7. If I look at that disclosure, and it is very helpful, so thank you for that. If I look at that disclosure, there are annualized expenses from lettings that roughly equate to over EUR 25 million. It implies that you have an NOI margin of 75% if I look at your annualized rents on the same table. I am just wondering.
For the FFO margin, it is a good assumption, yeah.
Okay. I am just wondering, is that lower? Obviously, it is far lower than all of your peers, but that is due to the outsourcing. Can that be improved or not in the near term?
Yes, a little bit to the outsourcing because if you look at the facility management, that gives us obviously a little bit of, let's say, an earnings out of it. This is linked to that. We are in-source more or less 100% regarding our property management and asset management. We have only some of some letting stuff or some of property management in areas like Möllen, Brandenburg where third parties are helping us. The in-sourcing proportion is very, very high in us.
Okay. Very, very helpful. Thanks very much on that.
Your next question comes from the line of Philipp Kaiser with Warburg Research. Please go ahead.
Yeah. Thank you for the presentation and for taking my questions. That's a couple of mainly with regards to your maturity profile and the financing. Could you give us a brief indication on the interest expenses on the signed term sheet of LBBW for the EUR 120 million secured loan?
I would say it is, you can assume it's less than 5%. It's higher than 4%, like the average, something like that. It's a little bit depending, and if we are swapping it, if we go into a hedging, right, we do not know exactly today what will be the quotes on the hedging will look like. Something in that ballpark is, I think, it's good to make an assumption on that.
Okay. Very helpful. With regards to the secured debt, would you intend to prolong any, yeah, increase in interest costs expecting from debt side?
Yeah, of course it is. I think the average interest is even lower than the new terms. I think the old ones are close to 3%. The new ones are close to that what we discussed with LBBW because it's the same product, more or less.
Okay. Perfect. Thanks for the clarification. Quite helpful. You already mentioned that part of the EUR 120 million is free liquidity to partially refinance the bond. Then roughly EUR 90 million are left. What's your plan for the rest of the bond? Could you already comment on that, at least a kind of an idea what is possible?
I think we have a couple of instruments, right, to do that. I would say it is unlikely that we have another secured facility because now we are with our unencumbered asset, with our encumbered assets, we are more or less done with the capacity on that. It should be something in the unsecured facility. It is a facility which is not so high. Yeah, it is something between EUR 80 million-EUR 100 million.
We have to be careful how we treat the convertible bond. Maybe it is even a little bit higher to be safe on that. To be honest, I do not understand where the share price is at the moment because we made a lot of success last year. We gave so much transparency. We have a clear path for the future. From my point of view, I do not understand why the share price is so low. The conversion price of the convertible is in the ballpark of CHF 1,030, which is more or less a 50% discount to today's EPRA NTA. Why should it not trade there? It is a little bit of we have to consider that. We have a little bit of time to look at what the markets are doing, how others will treat us.
It is not, so it is longer than 12 months, but we should take care about that. Then we have to look if we also be prepared for an unsecured financing of that convertible bond as well. Having said this, we are talking about EUR 100 million, a little bit more, to refinance the upcoming remaining facilities, which is compared as 2024, a smaller number, a smaller challenge. I feel not comfortable, but I feel it is feasible to do it in the market and that we can be successful on that remaining piece as well.
Perfect. Thanks for that. If I understood that right, if everything goes by plan, there is no need for liquidity generation by the sale of non-strategic assets. The pressure remains quite low. Okay.
Correct. On the strategic ones, as we did a little bit, let's say, in the past with the 5,000 units, that was key for us to cash on our hands to get rid of EUR 180 million of secured debt. It was in line with our strategy. Today's selling more out of the strategics and what we talked before about our margins and so on, that hurts us. The good news is we do not have to do that. We have to execute our non-strategics to get rid to really concentrate on a plain vanilla portfolio, to be efficient on the property management of that portfolio, and to achieve the cash on our hands, which we need to refinance it into CapEx. No other bigger sales out of our strategics.
Perfect. Thanks for the clarification. The next one is on the already repaid EUR 180 million. Could you indicate the expected interest savings due to this repayment for the current fiscal year?
I'm not clear of your question. You know that there's a 4.38% coupon on the bond. If I can repay it, it's more or less the same coupon with a new debt facility secured, there's no impact on that number, on that piece, more or less the same. The other thing is the EUR 120 million to use, the promissory notes are going away more or less with equity. Let's say it proceeds. That was a coupon of a little bit more than 3.5%, something like that. 3.5% to 4%, something like that. The repayment of the bond, as I mentioned before, was a 4.38% coupon. This is what we are losing there.
Okay. Perfect. Just to get an idea of the FFO bridge from last year to this year, roughly EUR 23 million less on rental income and generating at least the same amount of FFO, trying to understand the FFO bridge. Can you briefly?
It's a good question. It's a good question. We come up with such kind of a bridge not only in EBITDA, also in time of FFO next time. Good idea.
Yeah. Okay. Perfect. Thanks. What is the main issue then, cost efficiency and lower vacancy rate? What's the main driver?
Yeah, of course. As I mentioned before, we have some one-offs on the operational expenses, the others, which we do not see in 2025. That will be one event. The other thing is the increase of the ongoing rental increase by roughly 4%, as I mentioned, as a guidance due to normal rental upside from 558 BGB plus the vacancy reduction. That gives us headroom on the income streams together with the saved interest. On the other hand, it gives you, let's say, more or less the same outcome in FFO. I see your question. It's a good question. We bring that transparency and another push that time.
Okay. Perfect. Thanks. That would be very helpful. Yeah, decreasing costs and decreasing vacancy rate should offset the EUR 23 million in your view.
Yeah.
Perfect. Thanks a lot. The last one maybe, then I go back on the queue. You mentioned the income fee from the joint venture. Could you give us a gross ballpark on the dimension?
Yeah. Dimension is a little bit higher than the personnel cost we saved. So on the ballpark of two.
Okay. Perfect. Thanks for the transparency. Very helpful. All from my side. Thanks a lot.
Your next question comes from the line of Peter Yu with Wellington Management Group. Please go ahead.
Hello. Hey, Gerald. Can you hear me?
I hear you, Peter. Hi.
Hey. Hey. Thanks for the presentation there. It was good to see that term sheet on the LBBW facility. I do not know if you can give any color now on sort of how you are thinking about timing of dealing with the bonds versus the converts. The bonds are pretty coming up to maturity sooner. Maybe there is an argument to deal with it that could help the share price, which can then help with the price. I'm just trying to think about how you guys are thinking about how you want to sequence that.
At the moment, we learned that everything takes a little bit longer these days if you negotiate with banks. Best expectation from my side is that we are in May, that we are done with all this stuff, that we have to maybe draw down there, and then we can use it. To be honest, I do not feel from the coupon side so much under pressure because coupon is more or less the same like in the bond. I would say something in May could be achievable, best guess from today's perspective. If we can do that by our own, we would be quicker. Obviously, sometimes you have to deal with third parties, and they have also some other stuff to do. It takes us a little bit of time, but end of May should be a good guidance, yeah.
Okay. That is end of May for that extra EUR 90 million. Then you have probably got another EUR 80 million left on the bond to think about dealing between May and November. What sort of levers do you have to work on that at this point? You mentioned that more secured seems to be difficult at this point.
Yeah. To be honest, the best what I can say there is that we are paying back at maturity. Because if I am talking to people who deliver unsecured facilities, it is even higher than the outstanding coupon which I have under the bond. That is, let us say, a little bit from liability management and looking on our interest, makes a lot of sense to do it then at maturity. That's the best thing to have at the moment. If I can do that maybe a little bit earlier, which also helps the bond investors maybe, I would do. It's a little bit, let's say, I can't give you here a better number like the May guidance for the secured part here. I would say to be on the safe side, I would say at maturity for the remaining piece.
Okay. That's fine. If you were looking to do a new facility to take out the rest of the bonds in November, I guess you would probably look at potentially doing it together with the converts if your shares are trading at similar sort of levels and the converts haven't converted.
Yeah. I think there's some positive and negative impacts or reasons to do that earlier or maybe later. This is what we are considering right now. I think it also has an impact how the share price will develop over time. We are, let's say, not yet the cowboys. We want to be totally financed. We do not want to have here unsolved issues in our balance sheets looking for 12 months into the future. We will take care of that issue. I do not have really a clear answer to that at the moment, Peter.
Okay. That's fine. Thank you. Appreciate it.
All right. Thank you so much. We currently have no questions at this time. I would like to return the call back to Gerald Klinck for closing remarks.
Thank you for your questions. Unfortunately, I was not able to find the specific answer to all of your details here. We will take care of that in future time, especially the FFO bridge was a good impulse. Thank you for your time and for your patience. Hope to see and hear you back in the near future. Bye-bye.
Thank you. Ladies and gentlemen, this concludes our presentation. Thank you all for attending. You may now.