Thank you, George, and good morning, everybody. Thank you for joining and hoping to make your time worthwhile despite the fact that we have already published our preliminary numbers. Turning to slide 3, I would expect it comes as no surprise that UBM is showing a loss for 2023, as almost all market participants have shown quite significant losses. What seems to be more important is the fact that we continue to buy and sell on the market and actively participate in the market. Number 2 bullet is we are also seeing three megatrends which clearly go our direction: climate change, the imbalance between supply and demand, and significantly rising rates. 3, 300,000 sq m of our pipeline will be constructed in timber, which makes us one of the leading developers of buildings which are constructed in this carbon-neutral way.
4, it should also not be overlooked that we have successfully defended our market-leading ESG position in the DACH real estate and construction market over the past 12 months. Number 5, a solid balance sheet does not make us less cautious but should be encouraging for both our shareholders and our bondholders. And finally, number 6, the outlook is still far from bright, no doubt about this, but we expect that further sales of non-strategic assets will support our liquidity position on the market. May I hand over to our CFO, Patric Thate, to put our numbers into context and perspective.
Thank you, Thomas. Good morning, everybody. Please turn to slide 4. The 2023 results have been dominated by the revaluation of our assets. The revaluations of more than EUR 70 million, EUR 70 million, consist of adjustments in the book value of our financial assets, of inventory, as well as of assets in equity holdings. Overall, the EUR 70 million + of write-downs reflect approximately 7% of our asset base. On the other hand, we had positive effects from our residential projects, predominantly in the Czech Republic, as well as from the closing of the Bauberger Straße deal. On top of that, we were able to generate a profit from the sale of a non-core asset also in the Czech Republic. Equity ratio was at 30.3% at the end of 2023, which is again in our corridor between 30%-35%.
Compared to Q3 2023, we even have slightly increased the equity ratio. The reason for that was the shortening of the balance sheet in Q4. Balance sheet total was at EUR 1.254 billion by year-end 2023. Besides the negative results, the shrinking equity in comparison to full year 2022 was predominantly driven by the repayment of the hybrid in 2023. Net debt was at EUR 610 million. Besides the already mentioned effect from the repayment of the hybrid, net debt increased also because of our investment policy. I will come to that in more detail on slide number 15. Consequently, LTV also increased, but the level is still okay compared to our competitors. Be assured that we do everything necessary to keep our solid balance sheet position. Back to you, Thomas.
Thank you, Patric. Let me go into a bit more of detail regarding our ability to act in a really difficult environment. Now this is an important sentence that I want to say: the transactions market has not been closed for us at UBM in Q4, contrary to quite a few quarters before. We were able to sell our stake in Palais Hansen in Vienna to our long-term partner, Vienna Insurance Group, as well as a sizable logistics project in the Czech Republic, as mentioned by Patric. At the same time, we have acquired what will now become one of the tallest timber buildings in the world, the Timber Marina Tower. Contrary to many other cities, we are witnessing a shortage of new work office space in Vienna, with only a handful of new office projects in a city of more than 2 million inhabitants.
This is also why we have bought ourselves into the Central Hub project, which will be completed and ready for tenants as early as first quarter of next year. This is also in Vienna. It is the only light industrial and office project which I am aware of at the moment. I do not want to go through all the granted building permissions or project updates, as we have been continuously reporting on them over the last months. This, together with our reliability on the capital market and our lead position in ESG, will pay back. Why? Well, in the darkest hours of the night, one tends to forget about the next morning. Please turn to slide number 6. Climate change is going to continue a long time after the real estate market has been sorted out.
The ecological conversion necessary cannot be achieved without the building industry, which is contributing no less than 37% to all carbon emissions worldwide. Timber is the most significant lever in building construction. 2.3 billion tons of CO2 could be partially avoided by using timber instead of concrete, aluminum, or steel wherever possible. The building sector so far has been failing to meet its decarbonization targets, as can be seen on this chart, for the last couple of years. It is difficult to believe that politics will watch this doing nothing. There's only one planet, and Europe's most obvious competitive advantage is to be one of the most livable parts of the world. The second megatrend, as can be seen on chart number seven, is the exponentially growing imbalance of demand and supply, particularly when it comes to the residential sector. The lack of housing has become sociopolitical dynamite.
The most recent elections in Austria are proving my point. Austria's second-largest city, which is Graz, is governed by communists, and in Salzburg, which is my birth town, we see a coalition between Social Democrats and communists winning the elections with one promise: we are going to deliver more affordable housing. As we all know, the proof of the pudding is in eating. One thing which cannot be denied, however, is the rule of demand and supply. Ultimately, the only structural way to bring down housing prices is more supply. Politics start to react on this revelation and offer measures such as no real estate registration fee or loan subsidies. While this looks, to me at least, more like plaster aid, the ultimate solution lies in tax incentives such as accelerated depreciation not only for housing but for all buildings.
What appears to be a real estate crisis today will develop into a construction crisis tomorrow, with hundreds of thousands of employees losing their jobs. The real estate industry is a little bit what bees are for nature. If the bees die, there will be no fertilization of plants, which ultimately means that the entire ecosystem will collapse. Well, you think I'm exaggerating? Wait for the next couple of months. Rather than continuing to speak about doomsday scenarios, however, I would like to point out the third megatrend after climate change, as already mentioned, and the supply and demand imbalance as described right now. The third megatrend is the significant increase in rates. One of the issues for the real estate industry is the speed in which inflation and thereby interest rates have been increasing. Clearly, the world has been caught on the wrong foot.
One of the most late-coming and particularly fastest increases in inflation ever left the rent levels behind. They are picking up and sometimes even explode, as I would call a 20% increase in newly let apartments in Berlin last year. While we all expect inflation to drop and drop further, rent levels are only going one direction: up. This will be true for a considerably longer period of time, as illustrated by slide eight of our presentation. It takes time, but it will inevitably happen. Let us now turn to slide number nine and message number three of our presentation. Very important one too. The building material of the 21st century is timber. It does not only reduce carbon emissions, it even stores CO2 for an almost unlimited period of time.
Some of you might have scratched their heads if building material as old as wood, probably the oldest building material of mankind, is really going to make it to number one in the 21st century. But look around you today. This is what the entire industry is starting to do: multi-story housing, office skyscrapers, logistics, even overground parking facilities. They are all designed in timber construction. Some architects even believe that they have no chance whatsoever if they don't provide a draft in timber construction when they go into a competition. While timber construction projects might not stay the USP for UBM, UBM is in a leading position in Germany and Austria and therefore is also well-positioned to become the number one developer of timber projects in Europe. We are talking about 75% of our projects which are executed or planned in timber, with the percentage still rising.
But we are not only strong in timber, we are also strong in resi. We have almost 1,000 apartments under construction in Vienna's Village im Dritten, together with ARE, and Leopold Quartier Living, together with resi projects in Germany and Prague. We are talking about 3,275 units in total. In a shrinking supply situation, as many developers had to stall or even cancel their projects, there can be no doubt prices will benefit from this shortage of supply. And this is true for a longer period of time, not just for the next couple of months. Finally, UBM has also been jumping on another train: the light industrial and office, or if you want, business park boom. Please have a look at slide number 11. As a direct consequence of the pandemic, onshoring has become more than a buzzword.
Research and development are brought back to Europe, and 2023 has seen almost 50% of the investment volume go into such developments. With a Timber Factory in Munich, UBM, together with ARE again, is developing the most sizable business park in timber construction in the capital of Bavaria. We are talking about almost 60,000 sq m of gross floor area in four separate buildings or also four separate stages, offering space for a carpenter as much as for the headquarters of a Mittelstand company. There are more light industrial projects in our pipeline, such as Timberworks, also in Munich, and we shall keep you posted on this latest trend. At the same time, we are successfully defending our number one position regarding sustainability. Have a look at chart number 12.
We are proud of the only B- Prime rating by ISS ESG as much as of our Platinum rating by EcoVadis and a B rating by CDP. Green is an integral part of our strategy and thereby has become part of our DNA. Best proof are the Green Lease Framework, which has now been followed successfully our launched Green Finance Framework. And let me not forget to mention our ESG report, which is almost 140 pages. This report, and we are now on chart 13, based on GRI standards, documents our corporate carbon footprint, our ESG risks and opportunities, and is preparing ourselves for CSRD and EU Taxonomy at the very early stage for a company of our size. A centralized data collection together with an ESG Cockpit will ensure a leading edge over competition also in the future.
Needless to say, our ESG report has been audited again by PwC on a voluntary basis. At this stage, let me hand back to Patric for more financials.
Thanks, Thomas. First of all, please have a look on the left side of the slide. I'm now on slide number 14. Let me draw your attention again on the fact that we have no repayments on group level until the fourth quarter of 2025, so next year's fourth quarter. That gives us some time to wait for the market to recover and to refinance our bonds. We are prepared to act quickly when opportunities in the bond market arise. As already mentioned in the last call, we took the window of opportunity in a very challenging market environment in June last year and issued UBM's first green bond. We were satisfied with the retail market's demand for our new product, allowing us to place EUR 50 million.
Just as a reminder of what happened on the bond side last year when it comes to repayments: in the first half of the year, we repaid EUR 52 million of our outstanding hybrid bond before the step-up and repaid, refinanced the 2018 bond in November with an outstanding amount of EUR 91 million at that time. Let's take a look at UBM's cash position. Please turn to slide number 15. There is no doubt that cash is the most crucial asset at present. We are working hard to preserve our cash position and are therefore happy that we closed two important sales of non-core assets in the last quarter of 2023, as mentioned by Thomas before. Overall, the cash reserve was at more than EUR 150 million by 31st of December. Let me mention once more that we did something for our project pipeline also in 2023.
We acquired the Timber Marina Tower in Vienna as well as closed the transaction of the Timber Port project in Düsseldorf. On top, we invested in a 25% share of the project Central Hub in Vienna. On the bond side, I have already mentioned that we have repaid two bonds from liquidity. Overall, we invested EUR 175 million into our development pipeline and existing projects. This is another factor which differentiates us from most of our competitors. We still invest and work on the level of maturity of our project pipeline. Latest examples are the Village im Dritten plots, the start of the erection in Mainz, as well as the Leopold Quartier plot A and soon C and D. A good part of financial resources and effort has also been allocated to achieve building permits where we are in the phase of having a valid Bauvorbescheid.
This is especially true in Germany with Timber Living, Timber Factory, Timberworks, Timber Port, and others. To sum it up, our current cash position is solid. Managing cash remains our top priority for the foreseeable future. We have managed and will be able to manage our different sources of cash, be it sales of developments, apartments, be it sales of non-core assets, be it tapping the bond market. We have not, like many others, just preserved cash by not investing into the existing pipeline. Nevertheless, the cash we generated in the last years is used for the current economic challenges instead of bargain hunting. Let me now hand back to Thomas for the outlook.
Yes, and let me wrap it all up by looking at slide number 16. As we were unable to provide you with guidance at this stage, we want to try to be concrete regarding what can be expected by UBM over the course of the next months. We promise more asset sales to come. Standing at the beginning of the second quarter, we dared to guide that we realistically expect liquidity inflows in excess of EUR 75 million in the first half of this year from this source. The majority will be received in the second quarter, and we do not want to say more until the ink is dry under the various contracts, but you also know us and how we tend to be rather conservative in our guidance.
It will be another proof for our ruthless focus on cash management and will provide comfort under the current market conditions. We do not only execute on our timber pipeline with a groundbreaking ceremony of Leopold Quartier on Tuesday next week as a next step, but also hope for filling the majority of the vacant 29% of Timber Pioneer. So 29% are still up for rent in the Timber Pioneer. The demand in Frankfurt is slow, but it is there. Opportunities for the future arise from further standardization and modularization, as well as from working as a service developer for stranded assets. On the market environment side, I would like to provide you more with a summary than with new facts. We see rising rents already, and they will continue to rise far longer than inflation.
The reason beyond indexation is a widening housing supply gap as much as an office supply gap in Vienna and a light industrial boom in the seven A cities of Germany. Now, the biggest hope on a macroeconomic basis is a turning point in the interest rates, with economy growth rates diminishing close to a recession and inflation rates between 2% and 3% already throughout most of Europe. The question is not if, but only when. ECB will have to lower rates. It's not going to happen this afternoon. Some are hoping it's going to happen in June. Some more skeptical people are expecting it to happen after the summer, but it is going to happen. If I were able to tell you more precisely, I would probably not be on this conference call.
So let me conclude the formal part of our presentation and open the line for your questions. Thank you for your attention.
We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only headsets while asking a question. Anyone who has a question may press star and one at this time. Our first question comes from Stefan Scharff with SRC. Please go ahead.
Good morning from Frankfurt. Stefan here from SRC Research. My first question is: this market situation is difficult and may offer some opportunities to buy. And if you would be interested to buy opportunities, which kind of opportunities in which locations you would be interested?
Yeah. Look, Stefan, let me answer this question. We are not buyers at the moment, to be honest. I think we've been bold enough due to the special situation in Vienna that we've gone for the Timber Marina Tower and invested in the Central Hub in Vienna's 21 project. We have a clear market overview, and we know quite a few market participants who are looking for new office space. Often, the case is that they're reducing their office space, but we don't care because we are not the owners of the old office space, and they want to have a completely new layout. And when I talk about a handful of projects, I mean five. Maybe there are six or seven in Vienna, and I've missed out on two, but we have a total of five office projects in which two we have under control.
So we are pretty confident, but we had lengthy discussions: should we dare to do this investment or not? At the moment, and this is why I've mentioned the service developer angle, we are more interested to help out, particularly banks who are also helpful to us, to get their stranded development projects completed. And that is maybe less rewarding profit-wise but is also less cash-consuming because, just in case we haven't mentioned it about 15 times in our presentation, cash management is the number one focus. And the good thing is, particularly for guys like you who've been following us for the last couple of years, we have been talking about this since 2020. And therefore, I'm not eager to appear as a buyer on the market.
Okay. Okay. I see. What is your impression of the office market and about the development of the transaction level? We have a very low transaction level in the office market and also not too high in the hotels' market. So what could this mean for the next quarters and also mean for the next valuation results? Do you expect recovery to come in the second half of the year, or might this be too early?
Well, I think if I got your question right, it is a twofold question. And the latter part of the question, I would like to hand over to Patric in a minute, which is: do we see further write-downs? So this is for Patric. Where do I see the office market at the moment? Well, it's going to stay difficult. And coming back from MIPIM, our head of transactions reported that, well, there is an interest, but we are talking about 20x annual rent, which is a 5% kind of yield, if you want, or if you're an Austrian because we like to look at it on a yield basis. This is definitely too high or too low if you look at the rent multiple for the projects that we have.
Here, I think we really have to wait for a signal from Frankfurt, but not from the rent market, but from ECB. The moment this happens, I think there's enough money in standby that wants to be invested, not right now. And the office transaction market is going to remain difficult for the rest of the year, for sure. When it comes to hotels, the mood is a bit more positive, but the level of transactions is as bad as it is in every asset class. I mean, there's not one asset class that is booming. And so this is why we are talking so much about the non-core asset sales, which is usually standing assets in our portfolio, because that seems to be the more promising niche for 2024.
I don't dare to make a prediction for 2025 because, at the end, if the first starts to run into one direction, the herd will follow. Everybody then runs into the other direction. But I do not expect the transaction market, particularly for the two asset classes that you've asked for, to improve significantly over the course of the year. The stress is on significantly. Now, I would like to hand over to Patric regarding further write-downs.
Thank you.
Sure. Stefan, difficult question to answer, but I did my best, as always. So if we look at the write-downs, the revaluations, the pressure was coming last year, in 2023, from the surveyors, basically. And there, the predominant pressure was coming from the interest rates, which were a little bit leveled out by the rents. But it turned out that the revaluations in the books or the valuations in the books had to come down. So is there to be expected further pressure from the interest rates? I think Thomas talked about the ECB. Currently, nobody in the market is seeing that there is a lot of pressure in the direction of increasing interest rates. And on the current interest rate level, the surveyors have done their jobs. Is there coming pressure from the rents? Most probably not. Rents increasing even faster than expected.
So I guess, from that angle, we are not seeing too much pressure. But the pressure can come from a different angle, and this is when there are market transactions with objects, with offices, whatever, being close or comparable to your office you have in your books. So if, on the next side of the street, a plot is being sold on a fire sale, and it is publicly known information, the surveyor needs to make adjustments on the market transaction, not coming from the cash flow, he might assume. And that can't be foreseen easily if a pressure is coming and if you are, I have to say, unlucky enough that it is something which is comparable to what you have in your books.
Yeah. Yeah. One question, perhaps, about your Timber Pioneer. You have the Poleczki Park in Warsaw. You have also two hotels in Germany, one in the Netherlands and one in the Czech Republic. And the other big thing is the Timber Pioneer, which is now leased about 75%-80% after you also rented the retail space, but there are about 20%-25% of the space left. Are you here in close negotiations for a rental contract? And also, what could this mean for a sale of Timber Pioneer if we have a kind of recovery coming in the second half or, say, at the beginning of next year?
Very good question. Look, let me start with the last one, the Timber Pioneer one. We've rented out 10,000 sq m of office space, okay? And we've rented out 1,000 sq m, very rough numbers, of retail and recreation space because we've rented part of the ground floor to FITSEVENELEVEN fitness center. So we have now 4,500 sq m of office space still up for rent. And as we have an anchor tenant who's taken two-thirds of the office space, he's taken almost all floors. And so we have smaller office space per floor that we are currently putting on the market. Now, the good news is, and as I've mentioned, the Frankfurt office market is slow, but it is there. The demand is there. And the demand is particularly there for smaller tenants.
So the issue with the smaller tenants always is that it takes longer to pin them down because they can shop around, and they want flexibility, and they don't know should they rent 500 sq m or 750 sq m, and so on, and so on. But we are confident, because of the viewings that we are having in the Timber Pioneer, that we are able to rent it out almost completely. I mean, there's always a couple of square meters left at the end, but that doesn't make any difference for selling it. Now, when it comes to selling, we are not throwing our trophy asset on the market without giving it a second thought. And there, the big question is: what happens after a probably only 25 basis point interest rate change?
Is the market coming back strongly, or are the people kind of afraid that that could be a bull trap, I think one would say, on the equity market? Depending on this, we will decide later in the year. What we do and what we have already agreed with our partner is we do a vendor due diligence, a technical vendor due diligence, so that we could be quick or quicker in selling the asset if there is an interest because, usually, the technical due diligence is eating up three months-plus in a sales process. Now, you've mentioned a couple of other assets, and I don't want people to be confused. Poleczki is no worry for me. It's rented out more than 90%, and it pays its interest and repayments. So the issue is I'm not a holder of real estate. I'm a developer.
So I would love to sell it. And the decision that we've taken with Poleczki Park is that we now sell it in pieces. That's a fairly recent one, okay, because there was always the discussion about cannibalization, if you sell one building and then another building to somebody else. But I don't think that this is the big it is as big an issue as the overall Poleczki Business Park, which is simply too big to go in one transaction. So I expect standing assets and just have a look in our backup, we have listed them neatly there, that they will go. Now, the last question that you or the last part of your question that you had was on hotels.
Here, unfortunately, I have to kind of slow you down in maybe some optimism because the issue is everybody of us has experienced higher rates when making holidays or doing business trips in the hotels. But the higher rates are a function of higher cost. So the full recovery of the hotel market is really dependent on the occupancy rate. And I give you an example. In Prague, okay, we are still significantly, I think, 20% below the arrivals at the airport. And that is a very strong indication, at least for a luxury hotel as we have in Prague. And that, of course, puts pressure on the occupancy rate, even though the rates are on the upside or going up, let me put it this way.
I would kind of summarize it that hotels, okay, cost me more of a good night's sleep 18 months ago than they do right now.
Okay. Yeah. Thanks for the answers. Yeah, let's see how quick some asset classes can recover, and let's see how inflation develops. The new numbers from the US were a bit bad as inflation was up in March. But let's see if, in Europe, the trend for reduced inflation will prevail so that central bank has the chance to bring down interest rates quickly. So thank you very much, guys.
Thanks for your interesting questions.
Thanks, Stefan.
Our next question comes from Simon Stippig with Warburg Research . Please go ahead.
Hi. Good morning. Couple of questions from me and some follow-ups. First one would be in regard to sales and the standing portfolio sales you just mentioned in Q2. Could you at least tell from what geography they will come from? And then second one, in regard to the standing portfolio sale, your EUR 75 million liquidity inflow, is that a net cash inflow, or is that a liquidity-before-debt inflow?
Okay. These are easy ones, so I take them. Geography-wise, it's across all our geographies, okay? We've mentioned the Czech Republic, other than Austria, in the fourth quarter. And so maybe it's more related to Poland and Germany, but it's across the geographies. The EUR 75 million is net, okay? It's, of course, after repayment of debt.
Okay. Great. In regard to the lease-up, could you comment on the Central Hub lease-up? Is that already leased to a certain extent, or do you see demand for it?
Well, it is leased out, but only to a very limited extent because, of course, people are very short-term oriented at the moment. There were rumors on the Central Hub, and I'm not confirming them, but I'm also not denying them, that the Umweltbundesamt, okay, is looking for laboratory space. There is no laboratory space throughout Vienna. So they might be in a very good position when it comes to a AAA tenant, if you want, for it. I'm not worried. Otherwise, we would not have invested. This is one of the more interesting office projects in Vienna. It's opposite the Siemens headquarters, and it offers a lot that is simply not there in Vienna.
So I believe that, within the next 12 months, which is well, 10 months, I should say, which is the period until completion, we will see a fairly high rent level there but no signed contracts, apart from a few at the moment, which are interesting enough, the more difficult ones in regard of the floors.
Okay. Great. Thank you. Then one follow-up on the valuation you mentioned and comparable transactions, whereas, obviously, the only source or the only likely source for potentially further downward pressure. So here, my question is to the surveyor: wouldn't they differentiate between a fire sale and a transaction in a normal market or in a market under pressure? Because, I mean, given the insolvency proceedings and plenty of insolvency proceedings from project developers in Germany, actually, fire sales should be quite likely. Is there then a discussion in differentiation of the characteristics of a sale?
Of course, they do so, Simon. But the problem is always if there is not much market transaction, and most of the market transactions are in the area of fire sale. It starts with the question, "What is a fire sale, and what isn't a fire sale?" So yes, there is a discussion around that. But I was stressing that point because I see that as one of the risks when it comes to valuation. And as I pointed out, the question was in the direction from Stefan, "Are you seeing any risks?" And the answer is, "When I see a risk, it comes from that angle." Yes, they differentiate, but if it is most of the market, sooner or later, they will take that into account.
Great. Understood. And then one, in regard to dividends and your dividend suspensions or suspension for this year, could you maybe hand some additional insights into your dividend suspension decision? We talked about it in the last conference call already. But then also, you wrote that you did that also in solidarity with other stakeholders. Maybe here, also, some insight would be much appreciated. And then, if you don't pay a dividend, if I go actually down your capital structure or up your capital structure, depending on the risk, does it have any implication on the hybrid bond coupon, or can you actually confirm that you continue? I mean, you have a lot of cash, but I just wanted to ask because the next suspension would be probably a hybrid coupon bond suspension.
Your peers, such, I'm not naming them, but in Germany, there are a couple of peers that didn't pay it. Obviously, you are in a different position, but I just ask for, yeah, following up your dividend decision.
Okay. Let me take the dividend and pass the hybrid on to Patric. On the dividend, we've been very explicit. It's a cautionary measure, okay? Could we afford to pay a dividend? Yes. Would it be justifiable? No. Why? Because if you make a loss, you have no profit that you can distribute, period, okay? And if you ask about the solidarity, you're talking to one I asked the shareholders to have solidarity with me. Nobody in UBM is getting a bonus for 2023. Nobody, okay? And that clearly has not been an easy decision because, as often is the case, in a difficult environment, people put much more effort into what they're doing than sometimes if you have tailwind. And I don't want to stress the cycling analogy. Still, we have decided, "No. There is no profit.
There's nothing to distribute, not for our shareholders, not for our employees, including myself and my board colleagues." And before you ask this, not for the state. Still, if you look at our tax rate, you can see that, because of deferred taxes, okay, our tax rate is somewhat counterintuitive. But that has more something to do with deferred taxes and what have you. So overall, it is a cautionary measure. And it's also been very explicit that it does not change our policy of intending a dividend continuity. So the moment we make profits again, we also will recommend the payment of dividends. This year, or I should rather say for 2023, I would have thought it's obscene to do that, as much as I felt it is not right that I attend MIPIM because I think it's always sending the wrong signals. So back to or not back.
I refer to Patric when it comes to hybrid.
Yeah. Hybrid. I mean, as you have pointed out, it is an option. As we are paying no dividend, we could also think about not paying out the hybrid interest. With one thing which is different, that is, it's just a timing issue instead of not paying it because, sooner or later, we will have to pay it. We can decide on, "Do we want to pay it in June, or are we waiting until a later point in time?" There are some pros, and there are some cons regarding this decision. Pro, for example, it's a EUR 5.5 million number. And in current environment, maybe a EUR 5.5 million number could be invested very widely and could bring a lot of profits. And the EUR 5.5 million interest decision would be also coming with no additional interest because, if you put that into the future, you're not paying any interest on that.
The conclusion is, it has an impact on the bond market, maybe not only on the hybrid bond market but on the other bond market. So in a nutshell, and probably no answer will satisfy you, we are not obliged to pay them, but we will decide on this one closer to the payment date, and that will be somewhere in June.
Okay. Thank you for the insights. And one last one on your outlook. You mentioned you have previously said that already, but that you could imagine that you become a service developer for stranded assets. And here, I wonder, how quickly could you ramp up that business, and are you already in discussions for that? Are there any liabilities attached to it? If you function as a service developer, could you just give a little bit more insights into, yeah, into this business segment you could do for, obviously, a limited time?
Yeah. Well, if you look at the most prominent and probably definitely in Austria the largest bankruptcy ever - well, I shouldn't call it bankruptcy but insolvency - you see how slow things move. In this respect, it is even in our interest because it means, over the next five years, the project will be sold. Now, we all know that the project that has been started and where you have stalled construction in the first floor is not getting any better by leaving it stand around and securing it because you at least need some security to have it protected. I expect this business to start in the second half of the year.
I'm not aware of any competitor who has been awarded with a major contract as yet for finishing construction works other than from Mezzanine Capital Partner because Mezzanine Capital is always waiting, actually, for this situation because they wipe out the equity and are prepared for this situation. But in many cases, the administrator is struggling to get a good overview. And as you all have seen now, it's always complex. Now, do we have the capacity? Yes, we have. Are there any liabilities attached? I think that was the third part of your question. No other liabilities as we always have, which is we have to work diligently. I mean, if we deliver a work which is not diligent enough, of course, we are liable for it.
But we would not I repeat, we would not be prepared to go into the risk that is attached with getting it sold for a certain amount because it's no good time for risk-taking at the moment. Our risk appetite is fulfilled. And as Patric has presented it in one of his slides, originally, we've accumulated EUR 423 million to go for bargain hunting. Now, we need it for our day-to-day business. And I think the encouraging factor to take away from this conference call is we still operate. As I said, next week, we have the groundbreaking ceremony for the Leopold Quartier, and we are not intending to stop.
EUR 175 million of investment is the best proof that we put our money where our mouth is and that we can afford to do this because, as I also mentioned, maybe a little bit too pathetic, in the middle of the night, you sometimes forget about the break of dawn and that there will be daylight again. But I know you well enough, Simon, and sorry that I pick you. I could pick any of the participants on this call. In 18 months' time from now, you ask me, "Where are your profits? The market is back again. The market has been sorted out. So where are your profits?" And then I can't tell you I have been overly cautious and stopped everything that could stop. I hope this answered your question.
Yes. Sounds reasonable. And if I may, just one quick follow-up in regard to your hybrids because what you mentioned is that if you keep back paying the coupon and then you wouldn't pay interest at all, it's reasonable also. But then what would you expect would be the impact on your margin expansion because, obviously, if you then maybe you pay back the bond in November 2025 or you refinance it with a new bond, so what would you expect then in your margin to expand if you were to go then to the bond market? I know it's very hypothetical and not very easy to answer, but I just try my luck.
Yeah. You can always try your luck, but let me jump in here because I think Patric has everything that can be said about this topic. The core question is, "Can we invest EUR 5.5 million more profitable, okay, elsewhere?" And that is a question that we have to answer closer to the repayment date. And we've always been kind of very thin-lipped - not the right expression in English - we never gave any clear guidance also in terms of repaying a hybrid bond or whatever until recently before this. Because why should I deprive myself of flexibility without being in a situation where I have to do that? So I ask for your understanding that you will get this answer in due course and soon enough before the interest payment date, which is the 18th of June.
Okay. Thank you very much for the informative and long answers. Thanks.
Yeah. Thank you, Simon. We try our best.
Thanks, Simon.
Our next question comes from Philipp Sennewald with NuWays . Please go ahead.
Yeah. Thank you very much, and good morning from Hamburg. As we're approaching the hour mark, maybe only a quick once to conclude here. First of all, a follow-up to Simon's question, the first one. The EUR 75 million net inflow from the disposals, what is the corresponding gross figure on that one?
I didn't catch what is the corresponding?
The gross cash inflow, so pre-redemption of financing on that.
I'm still struggling. Sorry, because I'm now 61, so my hearing is one last try. So, what is the corresponding?
Yeah. It's the corresponding EUR 75 million of net liquidity inflow. What is the gross figure? What is the, yeah, gross figure on that?
Yeah. Okay. And what are the other questions? Maybe we take them all and then answer them step by step.
We'll do so. In general, you were referring to selling non-core assets. Can you put a price tag on your disposal pipeline for 2024, for the overall disposal pipeline?
Okay. Another one?
Another one would be generally on the short-term financing. You have around about EUR 100 million of development financing due in 2024. Is this an easy matter of easy prolonging this, or how confident are you on that matter?
Okay. The last question is probably the easiest, and I hand it to Patric.
I didn't catch this question because it's not my hearing. I think it's the line. So can you please repeat it, Philipp? Yeah. I'm sorry.
Yeah. Sorry. Let's try it one last time. If you cannot hear me well, I can also put the questions into an email later to you. But the EUR 100 million short-term development financing, which is due in 2024, this is like an easy prolongation with the banks, or I mean, how confident are you on that?
Yeah. Okay. You're talking now about the project financing, if I get you right through the line. How confident I'm refinancing it? I'm very confident refinancing it because that is an ongoing thing I'm doing all over the place. I have done that in 2023, 2022, so it's an ongoing process. We can refinance them. The thing we are seeing with the banks, and that is something I think can be unwieldy, is that banks are going into the discussion at the LTV levels you had in the past. If it is, for example, a refinancing where we are coming out of a plot of land and going into a construction, it is an easier one because normally, the LTV level in construction is better than on a plot of land.
If it is coming out of a construction because maybe we can't sell it and it's going into a standing financing, you immediately have the question on the table, "Is the LTV you had in the construction phase valid for a standing?" And normally, the standing has a bit lower LTV ratios, and therefore, sometimes you have to give a little bit back to the banks. But overall, I am not worried about the refinancings I have on the table currently on the project side.
Understood. Perfect. Shall we try the other questions again, or shall I text them to you via mail?
I apologize because it's a bad line. If you don't mind, if you put them in writing because they seem to be fairly detailed from what I could catch, we'd be happy to give them out to you and everybody else who's interested in it. Just drop us a line if you want it, okay? Sorry for this.
Yeah. And excuse from my side for the bad connectivity. I don't know what the problem is, but I will shoot you a mail later.
Thanks a lot.
Thank you.
Our last question comes from Philip Hettich with RBI. Please go ahead.
Hi, everybody, and thanks for your presentation, first of all. I mean, there have been a lot of questions asked, so one that would be left by me is, you saw a decrease of personal expenses of around 20% year-over-year on the back of the reduction of employees. Do you see the level of employees that you have now or personal expenses that were incurred now as a level that you need to execute your pipeline, or is there some further efficiencies to be gained in future?
Yeah. Very good question. Obviously, it's not only the reduction of personnel, but it is a mix of effects. We have, of course, an increase. I mean, in Austria, okay, because we are in Austria, according to the labor contract that we have, a big company, we had to increase the cost by 9%. Overall, the question, I think, goes more into the direction, "Are we done with the 265 employees?" It strongly depends on what I've explained regarding distressed asset service provider contracts. If we get such, and that is also our interest because we want to keep the people that we have right now, we are talking about something around 250 people that we would have. If nothing comes out of it, of course, the pressure to reduce personnel is there to a certain extent. However, let me put it into perspective.
Contrary to production companies, okay, our personnel costs are not saving us or not killing us. We have had a quite significant reduction in costs there, and you may expect, due to the cancellation or not payment of bonus, okay, that this is on a sustainable basis. If it's not because we pay bonuses, it's also positive because it means that we are profitable again. So from that point of view, I think we feel comfortable with a level around 250 people, but only subject to us obtaining some service developer contracts going forward. Otherwise, we would go for further cost optimizations also on the personnel side. We are, at the moment, focusing on other operating costs, okay?
That starts with, I don't know, extending our company cars for another year rather than buying them and ends with doing no UBM Day, which is costing us EUR 200,000, which would cost us EUR 250,000, just to give you examples on this. We are scrutinizing, of course, also our advisory cost because, obviously, it's not only us who are suffering but also our lawyers and our other consultants. In this respect, I think other than what is the country effect from indexation and inflation, you may expect the pressure on the cost side to continue. However, I don't want to pour water into the wine, you must be aware that the cost structure of a developer is different to what I have been experiencing myself when I still worked for a production company because that is an obvious one there, what to do.
Thanks a lot. Makes a lot of sense. Thanks for the color. Maybe one more follow-up. You mentioned the service developer opportunities. So would you see it more as a profit center if you can receive one of these contracts, or do you more see this as, yeah, as a continuation of or the ability to continue to work with the current scale of your organization? And are these contracts more highly competitive to be bid on, or are there not many players like you that are actively, yeah, working at this business?
Yeah. Philip you've almost answered the question yourself because there is not too much competition around. I mean, you know yourself 580 insolvencies in the real estate development business or in the real estate business in Germany alone last year. You are reading newspapers better than me, so I'm not going to mention the names where there are question marks behind it. I'm not aware of too many companies other than ours who would be able to finish larger-scale projects without the people who ask you putting into a higher-risk category. So I think it's not going to be a very competitive market. It's more a market of trust and reliability. And here, we have our competent promise fulfilled every time we gave it. So it would be on a cost-plus basis, and this answers the question. It's going to be it has to be profitable.
It's not to cover our fixed costs, okay? But the profitability level, of course, is much lower than compared with our development business, which, of course, has a certain speculative element because when we buy a piece of land, we usually don't build on it what is already permitted to do there but try to squeeze out more of it, try to do intelligent projects on it. And that's a big lever for profitability. Whereas on the service developer side, just to give you an idea, we are talking something between 5%-10% of margin.
Makes sense. Thanks a lot for answering it. Don't have any further questions at this point.
Sure. Well, I then would like to thank you. I hope we haven't been too long in the answers, but we wanted to give you an additional benefit for looking at the full-year numbers even despite the fact that we've published preliminary numbers. Thank you for your interest in us. I would now hand back to George, and if he didn't get any last-minute questions, I would like to ask him to wrap up our call. Thank you.
Thank you.