Good day, ladies and gentlemen, and warm welcome to today's earnings call of UBM Development AG following the publication of the Q1 financial figures of 2025. We are delighted to welcome the CEO, Thomas Winkler, and the CFO, Patric Thate, who will speak in a moment and guide us through the presentation and the results. After the presentation, we will move forward to the Q&A session. With this, let's start. Mr. Winkler, please, the stage is yours.
Thank you very much, Franziska, and good morning, everybody. Thank you for joining us only seven weeks after our last conference call. Today, as you might have noticed, we are testing a new conference call provider. If you have feedback, positive or negative, please share it with Chris. To our business, what has changed, or rather, what progress have we made in Q1? Please turn to chart three. The success story in Resi continues. We are able to double our sales compared with last year's already improved first quarter. Resi is out of the crisis. This is at least true for UBM. On top, the new Minister of Construction in Germany is sending encouraging signals. We have improved our EBT and kept our equity ratio stable. Still, cash remains the priority number one.
We used some of our unexpectedly high cash at year-end to repay bank debt and improve our financial results. Patric is also giving you a short summary of our successful hybrid bond issuance, even though it will only count for the second quarter. We continue to invest in our pipeline, and this differentiates us more and more from most of our peers. The outlook remains unchanged, and this is probably the best you can expect in a volatile time, which sends markets on a roller coaster on a weekly basis. Please follow me to slide number four. We have more than doubled Resi sales in Q1 and expect to continue our success story for half a year with an expected sales volume of more than 150 apartments. As mentioned before, the momentum continues, and our best-performing market currently is Prague.
I shall come back to our most recent project in Prague, also for other reasons. Before this, please go to the next slide, slide number five. Verena Hubertz, Germany's new Minister of Construction, has been on the news recently talking about a construction turbo, an imbow turbo. Even more important, she called timber construction for high-rise buildings one of her focal points because of its standardized nature. While completed apartments hit a 10-year low in Germany, new building permissions for Resi increased in Q1 for the first time again. Experts even ask themselves if this is the long-desired watershed. I personally doubt it and repeat myself. It will take years to make up for the failures in the past. Residential prices increased by 4.6% on average in Germany's seven A cities, and this speaks for itself.
Even office sales prices increased the fourth quarter in a row, but they come from a very low starting point. Germany's BaFin is loosening up its restrictions for residential loans. Let us see what FMA does in Austria on July the 1st. Real estate loans have increased by almost 25% in Germany and in the first quarter. Almost all of the increase comes from Resi, where the imbalance between supply and demand is continuing to rise. Let me now come back to our first new era project in Prague. It could serve as a case study for what we have announced in our half-year presentation last year. It's, by the way, slide number six. Cost savings and favorable market conditions in building construction suggest an above 25% contribution margin.
The continuously high demand and the limited supply on the market, particularly in good locations, made us sell 40% of Naplescentia; that's the name of the project, 40% of Naplescentia apartments off-plan. Just have a look at the top picture. This is what the site looked like in Q1. So pretty barren. And still, people were signing contracts as if there is no tomorrow. This encouraged us to increase prices by 10%, which did not harm the interest of new buyers so far. Start of construction, ruthless execution, and smooth handovers are now the name of the game. And remember, we've told you this in one of our last calls, we were able to buy out our 50% partner as he was in need of money. But we do not stop there.
We have acquired another piece of land on the opposite side of the street over the last year, and we shall mirror Naplescentia to become Naplescentia 2 with considerably reduced planning costs, of course, and all the experience that we are now gaining from Naplescentia 1. Before getting overly enthusiastic, let me hand over to Patric for the financials. Patric, please.
Thank you, Thomas. Good morning, everybody. Please turn to slide number seven. As Thomas already mentioned, the doubling of apartment sales in Q1 had also a positive impact on revenue. Revenue in the first quarter was primarily driven by residential sales and increased by 39.6% year- over- year. The EBT remained negative. While there was a slight improvement, it was still weighed down by a special effect. The municipal council in Innsbruck imposed a construction freeze on more than 23 land plots, which are now designated as potential area for subsidized housing. This also affected our residential project, Amras; that's the name of the project in Innsbruck, where we had to do a precautionary write-down. Looking at other balance sheet ratios, the total assets slightly decreased compared to the year-end figure as of December 31st, 2024. Due to the negative Q1 result, equity declined.
However, the equity ratio improved slightly and is once again trending toward our target range of 30%-35%, which remains unchanged. Net debt and the loan-to-value ratio increased slightly. All in all, we continue to report a solid balance sheet and are moving in the right direction. Let us continue to slide number eight. At the end of the last year, we had a liquidity position of almost EUR 200 million. As of the end of the first quarter, liquidity stands at EUR 143 million. We used the available cash at year-end to repay bank debt as we continue to feel confident in our cash management ability. Whenever possible, we try to limit our interest costs, improve our financial results. We can also already confirm now that we will make the upcoming hybrid interest payment in June on time, despite not having paid a dividend for the 2024 financial year.
Looking at the chart on the right, even in challenging times, we have demonstrated our ability to access the capital markets. In summer 2023, we issued our first EUR 50 million green bond exclusively placed with retail investors. This was followed by a EUR 93 million senior bond in Q4 2024. We are proud that, despite the ongoing difficulties in our industry, we have remained capital market capable. Of course, we will continue to work intensively on optimizing our debt maturity profile in the coming months. The chart on the right already includes the recently issued green hybrid bond 2025 placed at the beginning of May. Let's turn to slide number nine for more details. At the top of the bar chart on the left side of the slide, you can see the EUR 65 million green hybrid bond 2025.
This amount consists of EUR 43 million tendered from the 2021 hybrid bond and EUR 22 million in fresh money. EUR 57 million were either not tendered by investors or were not accepted by us as part of the offer. In total, this results in hybrid capital of EUR 122 million, which will remain available to us at least until June 2026. We held numerous investor meetings and would like to sincerely thank all investors for their trust. In Q3, we will also publish our official allocation report, which will transparently show how the green proceeds are being used to finance our sustainable projects. Now back to Thomas.
Thank you, Patric. Back to our pipeline. Our pipeline remains at EUR 1.9 billion and is not shrinking. The reason for it is that we can afford to continue investments in our projects. More than 75% in timber, almost 60% in residential, and 3,000 apartments give you an idea of our potential in the future. Nothing has changed, and that is the good news. The same is true for our outlook. Please turn to slide 11. We told you what we expect and delivered according to expectations in 2024. This is also the plan for 2025. Q1 showed an improvement over last year's Q1, and we remain confident for 2025 to turn out better than 2024, despite all the challenges. It is our resilience which gives us the confidence. 2025 is another year of transformation, no doubt.
The trend, however, is pointing in the right direction, and more than half of Estonia's way seems to be behind us. Let me skip the cautionary statement on the uncertainties this year. We believe that we shall be rewarded for our uphill battle at the end, or to be more precise, as from 2026. In Resi, more and more rental regulation drives tenants into ownership. There simply are no institutional investors prepared to provide enough Resi for rent in the light of the uncertain legal environment. It came out only a few minutes ago that the Minister of Justice is not in Germany, is not including the most recently built apartments for now. In a situation where supply is shrinking, this should drive sales prices. Gravity also applies to the real estate market. Office and light industrial remain undecided at the sidelines.
With productivity suffering, for how long will companies be able to sustain this position? Employees simply do not want to come back to offices, which made them unhappy for years. New office life has to compete with work from home. A lot needs to be changed to make this happen. One thing is the office space itself. I predict companies will start comparing rental expenses with personal costs and realize that staying with their offices where they are is pennywise and pound foolish. It is, as often as the case, only a question of time. Thank you for listening and looking forward to your questions. May I open the line for Q&A?
Yeah, thank you so much for the insightful presentation. We're now moving forward to the Q&A session, and we kindly request that only Analysts ask questions during this Q&A session. All other participants are invited to contact the investor relations team following the call. Thank you for your understanding. To pose a question, you can use the audio line. You can just raise your hand button and press that one. If you're dialed in by your phone, you can use the key combination star nine followed by star six. You can also use the chat. We have a first question of Mr. Scharff. You are able to speak now.
Yeah, good morning to all. I have three questions. The first question is about last year you could improve your numbers by selling some non-core assets in Poland and also in Austria. Can you say here a bit more if there might be some non-core asset sales also in this year to bring up liquidity and to set free capital? Perhaps it's better to do it step by step.
Okay. Thank you, Stefan, for your questions. If you go to the backup, you will see that our non-core assets have even increased. Non-core assets means assets up for sale because we have now also put Timber Pioneer into our asset base. We believe that the best chance to sell non-core assets is in the hotel arena based on talks that we have, but no promise, and it will be towards the end of the year because obviously if talks have been initiated now, it will take a while until you arrive at a signed contract. Our clear goal is to sell off as much of our non-core assets, which you find listed in the backup on slide number 25 of our presentation today.
This needs to contribute to our room for maneuver, particularly for fresh investments, as we do have success stories, just like the financial resources to make use of them fully.
Okay, okay. I see. Yeah, mostly at the second half of the year is the better time for investments, yes.
Yeah. Sorry for interrupting. It's always, I don't know how it goes, even if you expect the sale to happen in the end of September, it's always the 23rd of December that the closing happens. I don't know why. Sometimes it's even the 29th of January, but I haven't looked up what day it is this year.
Okay. Another question would be about the city of Innsbruck. There were some remarkable delays and also this big one-off effect. Perhaps you can say a bit more here what you expect for Innsbruck to happen in the second half of the year or next year, or might there be a solution with the city of Innsbruck to get this project going on?
I will direct your question to the mayor of Innsbruck. We obviously keep our lines open. There was a pretty strong reaction from the media in favor of us. Us is in this case not only real estate speculants like we are, okay, which we obviously aren't, but also the church because there are several properties also affected that belong to the church and obviously haven't been built on. Trying to be as cautious as possible, I would recommend everybody to look to Berlin or other areas where people thought that you can force something that simply makes no economic sense on market participants. I'm confident that the talks with the mayor and the city of Innsbruck will eventually end in a win-win situation for both of us. I can't make any promises as it's in the hands of a third party and not ourselves.
Okay, I see. I see. The next question is about your debt position. You have to step up in the sustainable hybrid bond, the remaining EUR 57 million next year in June. It is a bit time ahead, but you think it is more a topic for, let's say, payback of this EUR 57 million, or may there be another financial product to offer the people, the investors from the sustainable hybrid bond to tender at a later point in time?
Yeah, difficult to answer. As you are pointing out, that is next year in June, and we tap the potential we have seen on this one with the exchange. Nevertheless, going down the road, most probably when we come closer to this one, we wreck our brains about what we are going to do. Maybe tapping is a worthwhile thing for investors who might be a little bit cautious on the real estate market now and being more optimistic when it comes to the beginning of next year. We will solve that topic when we get closer to it. What we could do, we have done now.
Okay, okay. Yeah, I see. Yeah, that was a very good first step in May, beginning of May with the EUR 65 million and some fresh capital and some prolongations, but let's see how the second half or the beginning of next year develops. Thank you, guys.
Thank you for your questions, Stefan.
Yeah, thank you so much, Mr. Scharff . Now we're moving forward with another question from Simon Stippig . You should be able to speak now. To do so, you need to use the key combination star nine followed by star six. Right.
Hi, from Warburg. Can you hear me well?
Yes.
Yes, we can hear you.
Perfect. Perfect. There are a couple of instructions from the operator, obviously, to set me on mute. I have a couple of questions and would appreciate if you could answer those. First one would be, and assume those are related. It is in regard to revaluation in the P&L. I saw you had EUR 2.6 million in negative revaluation from the investment property. I assume that it is related to the question in regard to Innsbruck, what the special one-off effect was in euro, and then I will ask my other question after that.
Okay. You're right. The dominant one in this revaluation was Innsbruck. It's a minus 5.
Okay, great. Thank you. That would actually mean you would have turned positive on at least EBIT.
Not quite.
Yeah, okay. Got you. There are other, I would call it one-off factors. We had a little bit of tailwind from the currency. That was around EUR 3 million. If you bring that all together, you're ending up probably at a slightly negative result for the first quarter, taking all the effects out, not being positive, but we're getting closer to the red zero, I would say.
Okay, very well. Is that ahead of your expectations for H1? Because obviously you're expecting still to be in the negatives for the first half of the year and then turning positive. I would assume that this is actually a quite good result.
Yeah. No, we see that more as in line with our expectations.
Okay, great. Thank you. Second part of my questions would be on the project. On the last conference call, you mentioned the LeopoldQuartier and you expect to lease it out in the next six months. An update here I would appreciate. Also on the Timber Pioneer, as I see, I assume you changed that at cost to your standing asset portfolio. Here you said that you're in the process of negotiating a three-year financing, but could you also give some more details about that. The third part is in regard to the Timber Peak here. I think you at least noted a little bit of negotiation, potentially selling that to a family office. Is there also an update here. I think I also ask directly my third part, which is in regard to the share buyback.
I saw that in March, you obviously announced the share buyback. You haven't bought back any shares in that month. In the second quarter, did you already start to buy back shares? Could you give an update here on the amount of shares?
Sure. Very good questions. Not all with good answers. Let me start by making clear an operator has to be strict. Some like it, some do not like it, but it is good that they put you on mute to make sure that you are noticed. No, but without being tongue in cheek, let me start with the last question, share buyback. We have so far bought back 35,300 shares in an amount of EUR 700,000. I am rounding these numbers. You find the precise numbers on our homepage, investor relations, Axia. Okay. We update this every Tuesday to keep you up to date on this one. The other questions were all on leasing or non-leasing successes or refinancing. On the leasing successes, thank God that I have mentioned at the beginning of our conference call that the last one was only seven weeks ago.
You have rightly pointed out that I was talking about the timeframe of six months. You have heard a little bit of my frustration in my formal presentation because as it seems, the main competitor with every potential tenant is always the landlord where people are sitting. I think what companies do not realize is how frustrating this can be for their employees because usually these offices, as I said, have made people unhappy or are now making people unhappy as they have experienced a much more comfortable, much more relaxed atmosphere at home, but also an atmosphere at home where they have space for focus work. We have said that apartment prices have increased, and I do not see everybody being in a position to move to an apartment with one extra room for work from home. Eventually that will lead to a dramatic loss in efficiency.
It is for me completely ununderstandable why company leaders are not appreciating it, or maybe I should rather say supervisory board members because often we have the situation where the management wants to do it, but in times of uncertainties, everybody says, "Let's wait, let's wait." At times to get better, we all know that they stay volatile. Bottom line, why have I made such a long intro? I have nothing new to report. Be assured, if I had, I would have mentioned that straight away. The last question is on Timber Pioneer refinancing. Again, this is a standardized process that takes its time. I would not expect you to, or please do not expect that you hear something before the half-year call, which is the end of August. Even that could only be an update.
That is going kind of the standardized route. It is true for Timber Pioneer, it is true for Timber Peak, it is true for LeopoldQuartier . I mean, I have been talking about an uphill battle and definitely, okay, my distribution guys are most affected by it. I can only assure you that also the people around the table here, Patric and me, are getting involved in talks with tenants, which has never happened in the good old times. We are delighted to do so, but of course it also leads to frustrations because you have your working hypothesis. Will they rent or will they not rent? More often than not, we are proven wrong. Please keep your fingers crossed or if you are a good Catholic boy, pray because that is all that we can do.
I can assure you we put maximum effort into convincing people to come and join us. It's never got to do anything with our product. Okay? Our product, I think, is highly appreciated. This is true for the Timber Pioneer and it's as true for the LeopoldQuartier . The people who see it hardly ever have anything to criticize. They see the opportunities, even though you of course have an empty office space without the zoning, but there are enough excellent companies that will then provide you with the right zoning and create the right atmosphere over and above the timber construction atmosphere that of course is already there. I hope this answered your questions.
Sure, it does. I of course would have been even more happy if there was some leading success, for example, for the LeopoldQuartier , the Timber Peak. Yeah, let's keep on praying and hope for the best. Maybe one small follow-up question: in your project, the new era or first new era project, Naplescentia. Do you think this is in the same way replicable in Germany and Austria?
Yes. I wouldn't have mentioned it as a case study if it weren't. Congratulations for pronouncing it properly. As you could hear in my formal presentation, I'm still struggling with it. Obviously the tenants are all coming from Prague. For them, Naplescentia is an easy to pronounce word. As I said, we wouldn't be this confident about the second quarter and that is about as far as the visibility really goes with the reservations if that is not the case. Your question more points the direction, is it replicable in terms of construction cost savings? The answer is a definite yes. Okay?
I think we start to change the thinking after having banged our heads badly against the door at the beginning because everybody said, "The market environment, the interest rate, whatever, that all has to come right." No, we also have to do something on our side. It has been very clearly described and believe me in much more detail to our own people to arrive there. It is not an easy one. It is definitely not meaning that we compromise on quality or experience. It is more on how do we replicate and how do we continuously improve by doing the same thing. Now, Naplescentia, the only exception Naplescentia has is that we were lucky enough to finally get the last owner to sign the contract for Naplescentia 2, which is just opposite the road. We could mirror the project.
That is of course only possible in an ideal world. It is replicable. It is replicable both in Austria and Germany because the situation of the building construction industry is the same in all of these markets. We believe that we will be able to continue in terms of short-term benefiting from it in all of these three markets. The more decisive one is the long-term impact that we have by really stripping everything that is unnecessary, by standardizing, and by modularizing. I mean, we have no discussions anymore about bathroom modules in our company. These were huge, okay? We have no discussion on what it is that we could do in order to bring down our construction costs because that is the mid and long-term key to success for any developer, not only us.
Great. Thank you. That's very reassuring replication. Yeah, speak to you, I guess, in August then.
Yeah.
Thank you.
Wonderful. Thanks for your questions, Simon.
Thank you so much, Mr. Stippig. Now we have another question from Philip Hettich . You should be able to speak now.
Hello. Can you hear me?
Loud and clear.
Perfectly. Perfectly. The other Analysts did a very good job with asking questions. Only two left. One is probably very far ahead on Timber Pioneer. Are there discussions regarding potential tenants already on the way? What is the interest here for that building? The second question, again, I would like to circle back on Timber Pioneer because from the known real estate brokers, we always read that despite a challenging market in Frankfurt, new spaces, modern spaces, sustainable spaces with good locations, they face very high demand despite the challenges in this market. I was just wondering if there's any issue with the remaining space that you're trying to let here regarding the tenant fit. Is there maybe some need to further invest into the space, which might further prolong a sales process down the road?
Would be great if we could get any additional color here beyond what you already said. Thank you.
Very good. I appreciate that it's not easy to ask questions after you have already two people fully in the subject to ask them. Let me come to Timber Pioneer. The general statement on the Frankfurt market is if you strip the demand by public or semi-public interested parties, okay, you end up with big law firms who are, I would even call them meat nomads, fair enough. That is for extraordinary projects in right the business district center and what have you. The rest, okay, is, as I said, standing by the sideline, looking at the premise, being enthusiastic about what they see, and then at the end informing us that they stay where they are for the time being, always with extending their lease contracts for a short period of time.
I can assure you and encourage you to look at this space yourself, to inform yourself by life experience. There's nothing wrong with these spaces, okay? Other than the underground, okay, being delayed now until 2027, okay, it should have been in front of the door already almost when we started. Other than this deficit, okay, but it's kind of visible and it's been announced by the city of Frankfurt that this is the plan for whatever it's worth. There's nothing wrong with this space. There's more this uncertainty that leads to a lack of new rentals. If you are, for whatever reason, personally friend with a broker who has an interested party, please set him up with us. There is no exclusivity anymore, and we would be happy to take it up. On TMT, it's also a good question.
I mean, we made a lot of noise for Timber Marina Tower. This being an iconic building with Dominique Perrault, one of the highest class architects. We have also presented new images, okay, with a really amazing façade. That has indeed raised interest by potential tenants, even though we plan to complete the building only by 2029. Now, when I say this, it is clear we are talking big-sized tenants because the smaller-sized tenants usually decide at short notice, like 12-18 months ahead of them moving. There is an astonishingly big interest for this because you would, of course, also buy a certain image, quote unquote, by moving into it.
We are pretty confident, looking also at the lack of supply in the Viennese market, that Timber Marina should come at a very good point in time to the market, of course, with all the uncertainties and cautionary statement that I have to add to this. Did this answer your questions?
That's perfect. Thanks a lot. I was just raising the questions because we heard a lot of news about, yeah, a big firm relating to another firm in the neighborhood of the building was trying to incorporate in Austria or will incorporate in Austria. That was the background of my questions. That helps a lot. Thanks.
Sure.
Yeah. Thank you so much, Mr. Hettich, for the questions and also for answering the questions. In the meantime, we have received no further questions, and therefore we come to an end to today's earnings call. Thank you so much, everyone, for joining and your interest in UBM. Should further questions arise at a later time, please feel free to contact the investor relations team. Here, a big thank you to Thomas and Patric for your presentation and the time that it took to answer all the questions. I wish you a lovely day. With this, I hand over for some final remarks to Mr. Winkler. Thank you so much.
Franziska, I think you've done a terrific job. My feedback comes immediately. I think the call worked nice and fine. I also wanted to thank everybody who stayed on the line till now. It's not going without saying that the interest is there. I'm also, of course, delighted by the volume that our share has generated today with an above 20 price level because, as you can imagine, I look at the share price at least every two hours. I hope that this interest stays. For those to whom I'm not going to talk before the end of summer, I wish them all a good time. Take care of yourself. As Simon pointed out, praying is never doing any harm. All the best and have a good day.