Wonderful, good afternoon, everybody. Thank you for joining us presenting the highlights of our full year 2022. Patric and I shall go through six bullet points as you can see on slide number three. A brief recap on the year, our dividend proposal of EUR 1.10, what the difference a strong balance sheet can make in a year, which could easily become the year of the truth for real estate developers. Our sustainable ESG leadership, one of the most sizable timber construction pipelines in Europe, and the attempt of an outlook in times of very low visibility still. Please turn to slide number four to go into more detail. What we have witnessed the last year was the first half with a number of quite promising transactions as listed on the chart.
The sale of our project management company, Alba, by the way, at the end of June, has also led to a significant reduction in the number of employees, which dropped below 300 for the first time since Patric and I joined UBM almost seven years ago. Then we see the transaction market almost collapse completely over summer, and it has not recovered since. It seems as if the war in the Ukraine, cost inflation, erratic energy costs, rising interest rates, and the overall market uncertainty have kicked in all at once. With no transactions in the second half of the year, a net profit of more than EUR 27 million appears to be more than a respectable result. It has not been the result we were expecting.
We had hopes for more, and that we would be able to repeat the successes of the last two years of crisis. Looking at slide number five, you see the reasons why we have missed the EUR 40 million of our summer guidance. To a certain extent, it has also been a lack of luck in H2. We were hoping to obtain the zoning permit for Baubergerstraße and be able to close the sale of F.A.Z. Tower. These hopes have not materialized, and I'm afraid to say they continue to be pending in Q1. However, the question is only a question of time, and we remain confident that we are able to report mission accomplished for the course of the year, over the course of the year. We can, however, deliver some good other news regarding our reliability as a dividend payer. Please turn to slide number six.
Keeping the payout ratio at around 50%, we propose the AGM and dividend in an amount of EUR 1.10. Based on the share price at year-end, this represents a dividend yield of 4.8% and secures UBM's place in the ATX top dividend stock index. We have even more good news in store. Patric is going to inform you of our balance sheet strength and favorable repayment profiles, as well as our leading ESG position. Patric, please.
Thank you, Thomas. Good afternoon, everybody. Please turn to slide number seven and have, first of all, a look on the left-hand chart. By the end of 2022, equity amounted to EUR 501 million, which means more than half of a billion of equity. What are the main effects for the slight reduction last year? Firstly, we repaid a hybrid of EUR 25 million, and secondly, we had an error correction of the OePR, Österreichische Prüfstelle für Rechnungslegung, which is the Austrian Financial Reporting Enforcement Panel. Reflect this topic already in detail during our Q3 conference call in November. Despite these effects, we still report a very healthy equity ratio of 34.5%, which is at the upper end of our target range of 30%-35%.
As the title of this slide already suggests, UBM's balance sheet is clearly a competitive advantage in times where the transaction market stands still. This advantage also extends to our cash position. Our internal management, with its focus on cash flow, allowed us to hold UBM's liquidity position at a solid level during 2022. Cash and cash equivalents totaled EUR 323 million as of 31st December, 2022. Due to our financial strength, we were able to acquire a large-scale project in Mainz and negotiate an off-market transaction in Düsseldorf. Overall, we were able to keep our cash cushion despite extraordinary and normal cash outs like the repayments of the already mentioned hybrid capital, the payments of a dividend and hybrid interests, as well as the repayment of a senior bond.
Compared with the pre-corona year and 2019, cash increased by more than EUR 110 million. As already mentioned in our last calls, this financial buffer makes us independent of bank processes, guarantees, and timelines, and puts us in a favorable position for future acquisitions. In summary, the liquidity situation provides UBM with enough headroom and reserves for the uncertain times we are currently in. Let's now turn to our repayment profile on the next slide. Crucial for our solid cash position in 2022 were the two successful ESG-linked capital market transactions in 2021. We successfully managed to steer our repayment profile towards green financing.
More than 50% of our outstanding bonds and hybrids are already converted, and we have set ourselves the goal of increasing this number over the next few years. However, our cash position of EUR 323 million gives us enough headroom to wait for the right window and time for our next capital market bond transaction, which will be for sure a bond bringing even more green money into our company. In the first quarter of 2023, and therefore not part of the full year numbers, we have already repaid EUR 52.9 million of our hybrid bond. We have clearly proven to the market in recent years that we are a reliable bond issuer in good and in bad times.
We expect that the bond market will remain closed for UBM in the near-term future due to market volatility, but we are well prepared for the next step should the situation change. Today, slide number nine, we published UBM's first Green Finance Framework. It can be downloaded on our website. For UBM, it is the next step in further expanding the share of green financial products. It is a clear commitment to integrate sustainability in our future finance instruments like Green bonds, Green loans, and even Green Schuldscheindarlehen.
We have thought carefully about how the net proceeds can be used for products with clear environmental benefits. We have also conducted a second part opinion on our new framework to be aligned with the ICMA Green Bond Principles albeit LMA Green Loan Principles. Even though we still have time to prepare for the EU Taxonomy, we have already incorporated it into the framework. We have used the period of standstill on the bond market to prepare for a possible window of opportunity on the bond market in the second half of the year or later.
Please turn to slide number 10. It might come as a little surprise for you that UBM is best in class of ESG ratings. In 2022, we participated in the Carbon Disclosure Project (CDP) for the first time. We achieved a B rating straight away. ISS ESG confirmed our undisputed industry lead. UBM is the only company in the DACH region, real estate, and construction industry which has a B- rating. UBM is also among the top 1% of companies with a Platinum rating of all companies assessed by EcoVadis worldwide. In 2022, we also made it into the Austrian Sustainability Index (VÖNIX). In the lower section of the slide, you can see which frameworks we are using at UBM. This means considerable efforts but it is non-negotiable to achieve our sustainability goals and to remain the industry leader in the real estate sector. For 2023, we have set ourselves the goal of focussing on science-based targets. We will analyse our existing corporate carbon footprint in detail and then set scientifically validated targets for the coming years.
As you can see, in UBM, sustainability is not a trend but an attitude, which brings me to the next slide. ESG environment, social, and government is an integral part of our strategy and at the core of whatever we do. While this might sound familiar for many others claiming the same, we have converted to real wins. The fact is that we are publishing our third ESG report which is not only a step change compared with the last ones but is again audited by PwC. We do this without even being obliged to publish an ESG report at all. Last year, we did a lot in data quality in the non-financial area.
As for many other companies, collecting this data is a big challenge. That is why we have introduced an ESG reporting cockpit at UBM which can be compared to an SAP system for financial reporting. The processes have been rolled out across the group and were also evaluated by PwC in their audit. In 2022, we also looked at our most important suppliers and checked whether they meet our expectations in terms of sustainability. In summary, we have taken another big step forward in 2022. The 100+ pages ESG report was published on our website today and I invite you to take a look at it. By the way, some of the photographs taken at our Family Day were also worth looking at. May I now hand back to Thomas for the development pipeline and the outlook.
Now, thank you, Patric. I really love our ESG reports this year. Another thing we are extremely proud of is our repositioning as one of Europe's leading developers of timber projects. It is no less than a case study for a successful radical shift in strategy. Why?
A couple of weeks ago, we were able to announce Universal Investment as the anchor tenant for the Timber Pioneer. The 10,000 sq m of office space, which has been the number one rental activity in Frankfurt in Q1, prove that our new product is attractive, irrespective of the fact that there is more than 1 million sq m of vacant office space currently available in Frankfurt. We hope that we can prove in due course that this is also highly attractive to investors who look for a top ESG asset. Looking at slide 12, you see 12 timber projects from Vienna's LeopoldQuartier to Prague's Timber Praha, with more than a quarter of a million square meters in timber construction.
The projects represent roughly 60% of our entire pipeline, which breaks down to almost 60% in resi and a bit more than 40% in office. These are also the two asset classes with the highest growth expectations in terms of absolute demand over the next four years, and give us some comfort to be successful also in uncertain times. What is our outlook? Well, it is split in half again, as was 2022. Just have a look at slide number 13, the last slide of our formal presentation. We expect a difficult first half of the year for both the industry and UBM. There's little hope that the standstill on the transaction market is going to disappear. The price expectations between buyers and sellers are simply still too far apart. This might then lead to a further aggravation in a shortage of supply.
Yes, you're hearing correctly, a shortage of supply. Let me be more precise, a short-shortage of supply for the growing demand of EU Taxonomy conformed assets. The only fresh money that was still collected in Q1 has been for Article 8 and Article 9 funds. Other open fund vehicles were suffering significant money outflows. All of our timber construction projects, with a focus on renewable energy in most of them, qualify for such money. This sounds cautiously optimistic, we still feel not comfortable enough to provide you with a guidance at this point of time. We, as all of you, suffer from a lack of visibility when it comes to the war in the Ukraine, the future strategy of central banks, and the question, will we see a recession or will this not be the case?
We watch the situation carefully, closely focus on our cash flow management, but at the same time, make sure that we do not miss out on early indicators that the market conditions could settle and open up for a new price level of transactions. We are interested to hear your views and are delighted to answer your questions. Thank you for your attention. May I now open the line for questions?
Ladies and gentlemen, at this time, we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by one. If you wish to remove yourself from the question queue, you may press star followed by two. Anyone who has a question may press star followed by one at this time. One moment for the first question, please. We have the first question from Mr. Stefan Scharff from SRC Research. Please go ahead, sir.
Good afternoon from Frankfurt, Stefan here from SRC Research. My first question is about the Timber Pioneer. You just announced two weeks ago the good news about Universal moving into this very new and very modern office. There are still 4,000 sq m left. How fast do you expect to rent out the remaining space, and perhaps also makes a forward deal sense for the second half of the year for this property, or is it better to wait for next year and to wait for Universal to move in?
Good question. What I would like to stress, first of all, is that it is not only very new and very modern, it is very sustainable. It is one of the most sustainable office buildings you will find in Frankfurt, if not in Germany. We are in advanced talks, and some further news are likely to come out before the summer break. As you know, negotiations for a lease contract take up to three months and until the ink is dried, there is no kind of, you know, white smoke that we can report on. It is always as in the song or actually it is called The First Cut Is the Deepest. In this case, the first tenancy agreement is the most difficult one.
With the anchor tenant, we are pretty confident that the remaining 4,000 sq m are going to be leased out in due course. Regarding your question on a forward deal, first steps first. We first need to see the Timber Pioneer fully rented out, and we shall then test the market in the second half of 2023. This is part of the cautiously optimistic outlook that we have because we can clearly see also from the demand side that there is a scarcity, if not a supply gap, of EU EU Taxonomy conform assets. It might very well be that it's a parallel process.
Obviously, the situation closes, or the deal only settles when we've closed the transactions with when Universal Investment moves in April of next year.
Okay. I see. I see. Another question is about Munich, the Baubergerstraße . This is a quite big project, also some CapEx needs for the coming years. How about the building permit here? Do you have good progress with the city of Munich? What might be realistic to come for the building permit, let's say, until the end of the second quarter or more in the second half of the year?
Look, we've burnt our fingers already once by hoping or making you hope that it could be closed by year-end, and it obviously hasn't materialized. I mean, the good news is we are in very constructive talks with the city of Munich. We understand that they want to make 100% sure that we also develop the areas that we have promised to do, and we have no problem in committing to do so. Therefore, I suggest that you keep vary. We are making progress, and we are confident again that we can report to you. I do not want to promise that it's within Q2. It could also be over summer.
Okay. Okay. Perhaps one question about your hotels. You have four hotels in your books, two in Germany, then the Dutch hotel, and then the Andaz in Prague, which opened last year. Perhaps you can give us the gross operating profit of this four hotels in your books for 2022, and perhaps also say something about 2021 to compare it. I would expect a steep hike in the gross operating profit as the corona pandemic was almost over in 2022.
Maybe I tackle this question, Stefan. Let me first of all say is I think it makes more sense not to refer only to the hotels we have understanding. It is more your question referring to the point how the hotel is running overall, and I give you there the answer. What we see currently is that we are better off in Poland than we had expected. We are, I would say, on par in Germany with different performances in different cities, depending on if they are the fair business back or not. For the Netherlands and especially Czech Republic, these are two hotels which are only open since last year or mid of last year, so there is no real comparison.
Overall, when we look at the GOP in 2021, it was slightly positive with EUR 5 million overall hotels. If we look at 2022, we are more in the region of EUR 39 million. There is a real steep increase like you have already suggested in your question. Where is it coming from? It's two sources. One is the ADR, the Average Daily Rate, which jumped from EUR 90 in 2021 to EUR 120 in 2022. The flip side of that is that also the costs, the operating costs in the hotels were increasing due to inflation, personal costs, and other costs we had there.
You look at occupancy, which is the second driver for the GOP, we were in the 30% numbers in 2021, so rather low. We are back close to 60%, but we are still lacking, let's say, twelve.
Please go ahead.
Yes. Stefan, did you hear the answer on the hotels?
Yeah. The last point was the occupancy. It was 30% or something in 2021, now it's about 60% in 2022. That was the last I could hear.
I was only referring the last point, which is that the 60% we are roughly currently seeing 2022 is not the level we had in 2019, which is the last year where we say we want to compare ourselves to. There we were, let's say, 12- 15 percentage points higher.
I see.
Which needs to come in order to bring up GOP to the level we were used to.
Okay. I see, I see. On slide four, you mentioned the Innenstadtpaket, and you mentioned a possible sale here. Well, perhaps you can explain a bit more the Innenstadtpaket and also explain what this could mean for your cash inflow if there is a sale successful.
Yes. So the Innenstadtpaket is a part of the Paket X, which is one of our holdings we had, and we have already sold the Innenstadtpaket. It won't have any effect in 2023. It had a smaller effect in 2022, and we were referring to that because that was one of the sold items we had last year. It was roughly EUR 14.5 million overall, which we were able to get for the Innenstadtpaket on a 100% base because we are only a 50% holder of the Paket X. And it had a small increase in cash because a good part of that was also buried with a loan. Roughly a third of it was cash.
Overall, it was a smaller transaction for us and making the Paket X a little bit smaller as we were not seeing any development opportunities in that particular part of Paket X. Therefore, we sold.
Okay. Okay. Perhaps one word about Poland. I could read in your annual report that the output was down from EUR 79 million to only EUR 46 million now, which is more or less a decline of more than 40% or almost 50%. Is it about the hotels there or more about the Poleczki assets?
No, Poleczki is running quite well. It's not about the Poleczki. It's more about that we sold two hotels in the last period you are comparing to, and we hadn't any sold in the hotels because there were no developments we were doing in the hotels. The answer to that is two sold hotels in the period in 2021. Maybe I may add to it. Poland is a very difficult market for everybody at the moment. We have interest rates of more than 9%. We have a fairly volatile currency, and we have political instability within Poland with the upcoming elections and through the war in the Ukraine.
All this put together, with an overall standstill of transactions in the market, you can see why, you know, the, the, output there, has dropped significantly.
Okay. Okay, I see. Thank you, guys.
Thank you, Stefan, for your questions.
The next question comes from Simon Stippig from Warburg Research. Please go ahead.
Good afternoon. Thank you very much for taking my questions. First one would be in regard to the guidance 2023 again. We heard about the F.A.Z. tower and Baubergerstraße, or rather Timber Pioneer and Baubergerstraße. I wonder, is it possible that you quantify the impact of the Baubergerstraße? Secondly, because I haven't really seen or you intended in the past year to start one or two projects, and I know that, for example, there was Thule straße in Berlin. Have you started any new or additional projects? I, Thule straße was not started to my understanding. Have you started any new projects? What do you see will make the difference in this year?
Yeah. Very good questions. Look, I start with the back end. We haven't started Thule straße. It's a resi project in Berlin, and it's quite obvious why we are hesitant to start this because there's a big cloud hanging over resi in Berlin, and we all know where it's coming from. We saw very little reason why we should start a new project there. We are, of course, with the Timber Peak, okay, in advanced talks. We've given out the planning and the rest, and we see no delays in any of the projects that are listed on slide number 12 with the Timber pipeline.
We believe that the Timber pipeline is fairly resistant to any of the current market ups and downs and investors holding back because of this lack of assets that are on offer. You've pointed out quite correctly that we have two effects to watch out for this year. One is a purely internal one, which is Baubergerstraße coming through and F.A.Z being closed, we are very independent of market sentiment or whatever else. When it comes to F.A.Z., the main effect is the liquidity effect. Of course, as we forward sold F.A.Z., we have a percentage of completion as a proportionate contribution of the profitability of this project in the past.
With Bauberger straße, the effect will be, and depend on, what permit we are getting. With this permit, it is either yes or no. If we get this permit, as I've suggested over the course of this year, we will have a positive effect coming from the second half of the payment by our joint venture partner, which is ARE, a Austrian state-owned developer. No question about the creditworthiness of this one. Another effect out of the mix between office and there. That's the good news because it has nothing to do with the recovery of the market or anything.
It has more something to do which dates back to the past and now comes to a positive end.
Okay, great. Thank you very much for the long answer. The key question I have to ask is, can you quantify it in Euro terms, what impact you would see, even though it would depend on the permit you get, in regard to maybe the mix, et cetera? Or do you have like a range of values you're expecting there?
As you were pointing out, it depends a little bit on the permit situation. We probably look at something like EUR 20 million-EUR 25 million in the P&L. We see there as an effect. Cash effect is much higher, as Thomas was pointing out, as we are also receiving the second part of the payment which is still out, which was dependent on a valid permit. In the cash region it is more EUR 40 million-EUR 45 million.
Okay, great. Thank you very much. That clears my question in full. Second question would be in your presentation on page 29, it's your overview of total output and EBT in regard to segments, and I think Poland you have answered already. I then wonder about the services impact in regard to EBT, and then also what is the other segment in the total output by region. Can you explain both of those numbers, please?
Yes, of course. When we look at the total output of the other segment, there are some of our sales were backed into this category. That was Alba. That was the already answered in Stadtpaket from the Paket 6, and that was the CTB tower. That was the hotel development we were selling on last year. Predominantly these sales make up this segment. In the service, it is a different story because there you are seeing our management contracts, be it either to ourselves or be it to the other equity ones. That depends clearly on how much development is going on currently, and that is the reason why the number has gone down a little bit.
Okay, great. Just one question out of interest because Poland impacted negatively in 2022 and before the Poleczki Tower was mentioned, and surely you're generating rental income from it. Could you just explain a bit about in regard to the financing background of the Poleczki Tower and how long or what the LTV would be or also how long your remaining lease term and remaining debt is there, debt profile? That would be the highest interest. Then, maybe also your plans in regard to your portfolio there in the Poleczki Tower. I know, you mentioned before that you're intending to buy it, but the situation is not very easy, also the structure, the ownership structure.
Maybe is there any update or is it on hold?
I didn't get the last thing, but let me start with the debt profile of the Poleczki before we come to the last piece. The good news on this one, we have prolonged the Poleczki debt profile, the Poleczki debt, last year. It is a Euro financing, and it is from the LTV perspective. It is a little bit close to 60%, a little bit over 60%. It runs until 2026, and it is in its structure, it is also a fixed term as we were doing a swap on this one. Most of our project financing we normally do is not a fixed one, but this one is a fixed one.
We are safe until 2026 before then, before we have to come to the bank the next time. Regarding the lease terms, do you want to do this question or should I do it?
Continue. I didn't quite get the question.
The average lease terms you were referring to, also good news. It is close to being fully leased out, the Poleczki . We are talking about 97% or so. The average lease term is 4-5 years. It's also quite favorable because we renewed them in the last year or years in the crisis. Many of the lease terms were coming in 2021 or 2022. On the last question I didn't get with the ownership structure.
Sorry, yeah. I know, I was just wondering. Previously you mentioned you would sell it, and you would clear it up. Also the ownership structure of the Poleczki was difficult, or was rather complex to have an easy and quick sale?
Okay. Now I got the question. No, the Poleczki is a business park, right? It's not a tower, it's a business park consisting of several buildings using the same infrastructure. Okay? What we are working on is to separate out the infrastructure so that we can sell the Poleczki Park in slices. Because what we wanted to do for the longest period of time is to sell it as a whole, and then you don't have to separate out these, you know, general areas, so to say.
We are still working on it, and it's almost completed so that we can give you the answer that we would be able to sell Poleczki Business Park in pieces if we wanted from summer this year onwards.
Very interesting. Thank you very much. That answers my question. I have one last question here, if I may, and thanks again for answering the previous questions. On page 32 and also in combination with page 33 in your presentation, I wonder if you. It's actually the overview of the cash flow. I wonder if you could split out the investments, which is EUR 204 million, a little bit. I know that I said in combination with page 33, because some of those numbers are explained. I just don't know exactly what's underlying it. There's, for example, the project financing of EUR 81 million. Here also your project financing increased. The maturity increased this year from the nine month 2022 figure.
That would be something, I would be interested in. Maybe here also the investments of EUR 32 million in PP&E. Yeah, that's my last question. Thank you.
Okay. Let's first of all tackle your question regarding the EUR 81 million in the investments and project financing. That was predominantly Amras. A little bit north of EUR 20 million. The F.A.Z. EUR 17 million because we were developing that further over the year in 2022 until it was finished. It's Potsdam, which we sold on, but nevertheless, we had to pay still out something before we sold it. EUR 5 million, the Sugar Palace, EUR 4 million, then it gets very small and ends up with something like Baubergerstraße, EUR 3 million. The biggest one was Amras F.A.Z. In the investment properties, it is the LeopoldQuartier with EUR 10 million. It is Mainz also with EUR 10 million, which is only the office part because the rest you find in stocks.
It is the Liebigstraße with three, and then we're also getting into the EUR 1 million of this world. When it comes to the debt maturity profile, that is a different question because the question there is, I suggest that you are asking why that increased over the year for the year 2023, right?
Exactly.
Yeah. Okay. The reason for that was we were rolling on a financing from 2022 to 2023 in the nico because we are still in the land financing and have a discussion with the bank on, is that not going into a development financing or what's going on with the nico? The reason was just a prolongation. Second one was in Mainz, where we were going into a land financing, knowing that we will start somewhere in 2023 with the development and then change the financing from a land financing into a development financing, and therefore it will end in 2023.
The last one is Arcus in the Czech Republic, where we simply get a credit drawn, which we had for a long time, but the conditions were not set until that place. That will be repaid over the year when we hand over the apartments we have built. These are the three.
Great. Thank you very much. Just one in regard to PP&E.
The investment properties, that was, the LeopoldQuartier, the Mainz Paket , the Liebigstraße, and the Cornaux.
Oh, okay. Okay.
Sorry if I have overlapped that.
Sure. No, that's all okay. Thank you very much.
There are no further questions at this time, and I hand back to Thomas Winkler for closing comments.
Thank you for your interest. I know when you have preliminary numbers, the final numbers are never really exciting unless they are different to the preliminary numbers. In our case, this was not the case other than slightly above the preliminary numbers when it comes to earnings before taxes, which was EUR 0.5 million above the upper end of the guidance. I'm still grateful for the questions. We've had an an investor conference last week that Patric and I attended, it was in person. I must admit, you always learn a lot when being in dialogue. I'm grateful that you seem to share a certain percentage at least of our optimism.
I look forward to talking to you in the very near future when it comes to Q1. I think we've been very explicit that you shouldn't expect too much for Q1 and H1. Don't blame us that we haven't told you before, but we are optimistic for the full year. With this, I wish you a good day and thank you once more for listening.
Thank you.