Welcome, ladies and gentlemen, to today's earnings call of the UBM Development AG, following the publication of the Q1 figures of 2026. 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 on to an analyst's Q&A session. As an institutional investor, we would like to invite you to contact UBM Development AG directly after the earnings call to clarify any questions you may have. We are looking forward to the results. Having said this, Thomas Winkler, please, the stage is yours.
Thank you. The line is mine. Judith, good introduction. Good morning, everybody. Thank you for joining today's update call on Q1. Let us take a brief look at our topics first. The turnaround, which started in Q2 of last year, continues. We are proud to report a positive result before and after taxes. On top of it, our liquidity has increased to EUR 168 million.
An equity ratio at the upper end of the range underlines the solidity of our balance sheet. Strong resi sales continued into 2026. Our affordable living strategy is shaping quickly and stakeholder response is overwhelming. This creates new opportunities in the future. Watch out for our news flow. With financials developing as beautifully as they did, the floor, or rather the line, is yours, Patric.
Thank you, Thomas. Good morning, everybody. Before turning to my first slide, I want to point out that our financial discipline and active balance sheet management, which we have upheld over the last years, have once again paid off. Please turn to slide number two. The positive trend of last year also prevails in Q1. We have again achieved a positive result, but this time not only before tax, but also after tax. The main driver is coming from our resi sales, predominantly in Austria. Thomas will come back to the number of apartments sold later in the presentation.
Balance sheet ratios are well under control. With an equity ratio of 33.7%, we are heading for the upper end of our equity range of 30%-35%. Equity has not only been positively influenced by the result, but is predominantly driven by the issuance of Genussrecht capital of EUR 25 million in the first quarter. Net debt at EUR 484 million is also well under control. This represents an LTV of 43%. Overall, this positive result has reinforced our conviction that we are on the right track with our financial discipline, be it the tight cash control, the debt strategy, or the cost control we are doing since quite a while.
On the next slide, I will give you more flavor on cash management, where I also have some positive news to report. Please turn to slide number three. Let me walk you through our cash position and repayment profile. Both reflects our continued focus on active liquidity management and financial discipline. Starting with the cash chart on the left. You can see that our cash position has remained broadly stable throughout the last reporting periods.
This is not by accident. It reflects deliberate cash and debt management and ongoing inflows from residential sales, which provide a reliable and recurring source of liquidity. Looking at Q1, we closed full year 2025 at EUR 118 million and Q1 2026 at EUR 168 million of cash. An increase of EUR 50 million in a single quarter. This gives us a solid starting point heading into the repayment events of Q2 2026. On that note, let me turn to the repayment profile on the right. The most immediate item on the agenda is Q2 2026, where we have two bonds maturing coming to the step update.
A EUR 73 million senior bond, which was already repaid last week, and a EUR 56 million hybrid bond. Together, that is EUR 129 million in repayments without the interest, of course. We are well prepared for this, not only because of the present cash position. The EUR 25 million Genussrecht raised in the Q1, combined with the EUR 56 million we are planning to raise within the next two weeks. We will be able to replace the hybrid bond before it step up on June 18th. In other words, we are replacing hybrid capital with subordinated Genussrechts capital, a clean and deliberate transition.
After June, we will have done our homework also when it comes to the equity hybrid position. Beyond 2026, the picture on maturity is very manageable. There are no bond repayments between July 2027 and October 2029. Three key messages from this slide. First, our liquidity position has been actively managed and solid for years. Second, the Q2 2026 repayments are fully planned for and covered. Third, our maturity profile beyond 2026 is well balanced.
Please turn to slide number four. As I have already briefly mentioned, we can rely on a robust balance sheet, particularly in terms of equity and the net debt ratio, LTV. Thanks to our proactive balance sheet management, we were able to increase our equity by EUR 27 million compared with the end of the previous years. Hence, our equity stood at EUR 377 million at the end of Q1. With an equity ratio of 33.7%, we finished Q1 comfortably within our equity range. Our focus remains on maintaining a strong equity base so that we can be financially flexible while preserving our financial resilience.
This is a good starting point and a precondition for the strategic shift to affordable housing. Not only were we able to increase our equity, but we also managed to reduce our debt ratio at the same time. As can be seen in the chart on the right, UBM has been able to not only control, but steadily reduce its net debt despite a challenging market environment. Net debt has been at its lowest level since 2021. This results in positive LTV development. After peaking at 51% in Q1 2024, our loan-to-value ratio has steadily declined and now stands at 43%. Maintaining a conservative LTV profile in a challenging market is not a walk in the park, and I think these numbers speak for itself. Back to Thomas.
Thank you, Patric. Slide five, please. We see unbroken momentum when it comes to our resi sales. With an order backlog of 86 units, I have no good reason to doubt that this trend continues into the future. What does order backlog actually mean? An order backlog includes reservations with a down payment, and in many cases only awaits public notary, KYC, or bank clearing. In other words, it is only a question of time that the order backlog converts into sales. Germany is still slow, represents an upside without any doubt. Let us have a look at slide six to explain my optimism.
Building permits for new apartments have been almost collapsing between 2022 and 2025. They've been shrinking double-digit year-over-year. Even looking at this year's and next year's forecast, there's very little hope for a recovery, leave alone a quick recovery. While building permits in Germany are predicted to grow over the next two years, the reality looks pretty dire. With 206,500 apartments completed last year, we have seen the lowest number since 2012. It represents a downturn of 18%, or a reduction of more than 45,000 apartments over 2024, which was already not a terrific year.
A recent article in The Economist with the sub-headline, "Rent Controls Are Exacerbating Housing Shortages and Feeding Populist Anger" says it all. We have been warning of a growing mismatch between demand and supply over at least the last 18 months. Have a look at slide seven to see the effects on pricing. Across Europe, residential prices are back above pre-pandemic levels and rising again, despite rising interest rate expectations and an unhealthy percentage of net income devoted to housing.
Every other industry would actually rack its brain how to reduce the cost of the product. European governments think of rent control and more regulation with perverse consequences, as shown before. UBM's answer is different. Have a look at the next slide. We have informed you of and are busy executing a two-product strategy: affordable housing and premium living. While affordable could be called home cooking if you want, premium is the gourmet product.
The one is driving volume, the other one is driving the margins. The one is targeting middle income, younger families who are prepared to rent at this stage of their lives. Affordable housing is designed for institutional investors. The other one is addressing the upper income, part of the population, and individual buyers. Affordable needs to be technology agnostic. What do I mean? The building system is suggested and provided by the construction company, as long as the price per square meter of living space above ground is at or below EUR 2,000.
Offers from several providers are available on the market now. At the same time, we continue our timber hybrid commitment in premium. Standardization, simplification, and modularization are the key drivers for both. The construction site has to move into the factory. I'm not getting tired to say this over and over again. Industrial production brings down cost, eliminates the number of deficiencies, and addresses the shortage of construction workers. We continue to pursue our strategy of focusing on A cities like Vienna, Munich, or Prague in premium.
We follow the market demand and go wherever the administrative bottleneck is acknowledged and permits are granted in shorter periods than we see today. Housing is the top public concern, according to polls across Europe. There can be no doubt affordable housing is the next big thing in all of UBM's markets. How affordable is affordable? Let Patric guide you through our master calculation. Patric, please.
Let me now walk you through our development calculation for affordable housing, which demonstrates that our new asset class can and should develop into a source of future profits. As you can see, in Austria, we are targeting net selling prices of around EUR 5,000/ sq m residential floor area. At this price, and with a monthly rent of EUR 15/ sq m of residential floor area, as well as EUR 150 per parking space, institutional investors can expect an annual return of around 4% for their investment in affordable housing.
As mentioned before, this product is designed rather for institutional than individual investors. To achieve those net selling prices or yields, one of the main key factor is to reduce the above ground construction cost to less than EUR 2,000/ sq m residential floor area. This can be achieved, in particular, using prefabrication element modular systems. Additional construction costs amount to around EUR 500 each for underground construction and incidental costs. Although we expect a reduction in incidental costs over time as the learning curve will kick in, this is not yet apparent in underground construction.
In contrast to underground construction, we will be able to achieve cost savings in financing. These cost savings derive from the shorter construction phase, whereas the total period to be financed from the purchase of the land, of the completion of construction, to the completion of the construction, will be around three and a half years. We assume a debt-to-equity ratio of 50/50 in the land acquisition phase and 25/75 split between debt and equity in the construction phase. This could be further improved by customer institutional investors prepayments in line with the BTVG and the like, which are not part of the calculation.
Land acquisition is calculated at EUR 850 per square meter. I want to flag this clearly. Land cost is highly location dependent and directly tied to achievable rents. This is one of the key levers in our selection process for land. After deducting all these costs, the calculated developer margin comes to around 18%-19% in our master calculation. As we view this product a key volume driver, we believe that a margin slightly below the target of 20% is more than justifiable. Given these promising figures, our affordable housing scheme is set to be the next big thing in all UBM markets, we are looking forward to implementing it as soon as possible. With that, I would like to thank you all for your attention and hand back to Thomas.
Okay. Where do we stand five months into 2026, and what is the outlook? We are fully focused on continuing the turnaround as we rebalance our portfolio. This means a tick in the execution box for our existing premium residential pipeline of around 2,000 apartments. We are also keeping the ESG focus as nobody will be interested in buying an asset which is stranded within less than 10 years. Whoever is not learning the lesson now that the dependence on fossil fuels is unsustainable will not get it in the future and eventually faces the same fate as the dinosaurs.
We have brought our two-product strategy on the way, and I promise, nothing will stop us from implementing it. We still owe you evidence of success in being able to free up cash from our standing and non-strategic project portfolio. Bear with us for a little longer, and we shall deliver as we did in the past. Watch us build a dedicated affordable housing pipeline. We have been overwhelmed by the first market reactions, including first offers for suitable properties.
We see less competition for these properties already today, and we shall see even less in the future when we benefit from being in the right segment and facing growing demand. Before getting too carried away, let me end the formal presentation at this stage and open the line for your questions. Thank you for your attention.
Thank you, Thomas and Patric. Ladies and gentlemen, we will now move on to the analysts Q&A session. We kindly request that only analysts ask questions during the Q&A session. All other participants are invited to contact the investor relations team following the call. Thank you for your understanding. To ensure a dynamic and interactive discussion, we encourage to ask your questions live via audio line. To do so, please click on the Raise Your Hand button. If you do not have the opportunity to speak freely today, you can also place your questions in our chat box. We are starting with Stefan Scharff. The stage is yours. I handed you the unmute question.
Good morning.
Hello.
Good morning, Thomas. Good morning, gentlemen. I have a couple of question. The first question is about the portfolio rebalancing. It will need some time, two or three years, maybe a little bit more, and also capital. How far or how is the progress with selling non-strategic assets or non-strategic projects, or to sell also hotels or other investment properties?
Okay. We answer the questions question- by- question.
Yeah
Usually you have more, Stefan.
Yeah.
Good morning.
Step by step, yeah.
Well, two to three years are right to complete the portfolio rebalancing, the portfolio rebalancing has already started. Okay? It will be a transitional process, and it will go step by step as much as we didn't stop developing hotels overnight, particularly as we had the hotels that were already under construction to be completed. The two to three years is the right guess to say that is then the ultimate EUR 2.2 billion pipeline. We are building this pipeline as we speak. The other question, of course, is the right one. How do you want to finance it?
Yes, we've been very open in saying we are financing it through a sales list, which you can find in our presentation on slide number 19. Okay. If you want to circle back to slide number 19, you will see what we have put up for sale officially, readable for everyone. The Immobilien Magazin has excessively reported on it. You've mentioned hotels, and appropriately you've mentioned hotels, because the hotel transaction market is actually the first market that has reopened fully again, with office being somewhat behind, which is the second column.
The resi is actually a question of the next six months. We will have sold off almost all of the resi that you see in column number three within the next six months. I'm pretty confident that goes hand in hand with our acquisition process regarding new pieces of land. You know that we have one project already in the permitting process where we own the land already.
Okay. Okay, I see. Do we get some positive news here, let's say in the second or in the third quarter, that you can deliver some first sale transactions?
Yes. I'm confident, until the ink is dried, it's a bit premature to talk about it. We are in several conversations regarding the sale of such assets.
Okay. I see. If you look at the resi sales, you were strong last year in Austria and also in the Czech Republic. There was not too much or just a middle picture in Germany regarding the resi sales. You have Mainz, the Zollhafen, and you also have Berlin, Talstrasse. Can you say a bit more here? What do you expect, or how is the picture at the moment in Germany for Mainz and Berlin?
Yeah. Very good question. Don't forget about Munich. You have this chart that I've presented when I've presented the sales numbers on slide number five, where it gives you all the apartments for sale. You can see that Munich is showing up with 366-
Yes.
...apartments in two projects. We have one Timber Living that is not even officially in the marketing process because we had to settle, which we have done meanwhile, a dispute with the neighbors. Even without being officially on the market, we have a double-digit reservation number in Munich. That's good news. I've been very optimistic when it comes to Germany catching up, because look, there are 200,000 apartments that are completed every year.
There is 400,000 apartments which are needed. Unless you believe that we are building, or rather developing these apartments in completely the wrong areas of Germany, which we don't because we are only in the A cities, you should kind of understand our optimism. Bear with us, you will see more sales than you've seen last year from Germany.
Okay, I see. There's also some movement on your debt side. You did the repayment of the sustainability bond last week, I think. There's also this hybrid bond to come in June, EUR 56 million. That depends a little bit on the new participation capital. You did the first step by raising EUR 25 million, and there will be another EUR 50 million or EUR 60 million to come in the next weeks. Can you say a bit more here about the coupon? I would suggest, or I would think about 8.5%-9.5%, or what's your cash position after all these transactions? What does it mean also for your financing expenses to come in the second half of the year and in next year?
Okay. That is more than one question, to be honest.
Oh, sorry.
Anyhow, let's make it step by step. In terms of interest rates, you're right. We publicly already hammered that out. Note seven says 9%. That is the ballpark. You are right between 8.5%-9.5%. You are also right with the step-up date. That is in June for the hybrids. We repaid the bond, as you pointed out in your question as well, with EUR 73 million+ the interest on the EUR 73 million last week. That has been already paid. The step-up with EUR 56.4, that is the amount outstanding, and on top of that, there is an interest rate, so it's close to EUR 60 million.
That will be done in June, and we are in end negotiations in order to have an inflow, which is an equal amount to EUR 56 soon, so that we have If you want an inflow and an outflow and it doesn't have any effect on the cash position then. The EUR 73 or EUR 75 had a cash effect on the cash position, so you have to deduct that from the EUR 168 million which we presented. On top of that, the inflows are coming from residential for sure over time.
That is the Leopold Quartier D, where we are selling and where we will be soon out of the bank financing debt and then it's going into our pockets. It's the rest of the Leopold Quartier Bauteil C. It's also in Germany when we started selling more in Mainz. That goes also into our pocket. The cash inflows will come from this one. In addition to this, what Thomas said in terms of the refinancing, so we will see the one or the other project we will sell. Cash inflows coming also from this position. I don't have a clear number which I can communicate where the cash is going to.
Anyhow, you know our policy. We are trying to have always a proper cash position so that we can pay back. The good news is after the second quarter, we have paid back what we have in this year in terms of bond and hybrids to be done. The second quarter can be probably also the cash position can be used for our strategic rebalancing, which is needed, and most probably you won't see cash positions which are in the range of the first quarter. The EUR 168 was piled up in order to be able to show the market that the repayments can be done easily.
Okay. My assumption is that you could be for half year close to the last year, December, where it was at almost EUR 120 million, and you could be close to that if no further sales or disposals kicking in, bringing this number even higher. EUR 120 from December could be approached that you are close to this number also in end of June. Okay. Another question is about Poland. The output in Poland quadrupled to EUR 38 million. In the quarterly report I could read about Poland that you sold a stake in the Poleczki Business Park. Perhaps you can say a little bit more about Poland and this sale.
Yes, of course. You pointed it out correctly. The number has been influenced predominantly from the 25% stake, 24% stake we were selling in the Poleczki Business Park. We are now at 51%-49% instead of 76%-24%. Poland is a topic where we look into, is there affordable housing or it's called their PRS. Is that something we could go into? We see that the market is moving. We still have their land in the region of the Poleczki Park, which can be used for this one.
We look at that from the angle, should we do it ourself or should we sell it? Poland will be probably, over time, a small source of cash in terms of helping us in the strategic shift. I don't see that we do things like we have done in the first quarter. We won't see many things in Poleczki because that is a tick off for us with the selling of the 24%. Remember that Poleczki is also quite a nice source of rent income.
Okay. Yeah. It's a good cash machine, yeah. As this is the last day of Christoph, all the best from my side for Christoph, and it was always a pleasure and have a good time or a good time for your next step. Thank you very much.
Thank you for mentioning it. Thank you.
Yes. Thank you very much, Mr. Scharff. We will move on to Christoph Bruns with the next questions. You may unmute yourself now, Mr. Bruns.
Yes, hello.
Hello.
Hello. Thank you for the presentation and the already answered questions. There's one remaining. I would like to know where do you stand with your ambitions for the affordable housing sector, and could you provide us with an update on the pilot project?
Sure. It's quite funny because with all the Christophs and Christians, I think you were called Christoph, but it's Christian. Let's make it easy-
Yes.
...where do we stand? Let me start with the second question. Second question is on our pilot project, and it's in Viktor Kaplan Straße here in Vienna. It's 92 apartments. Okay? It's an eight-story building. It's almost an ideal plot of land. Okay? We have still to demolish what's built there. We are making good progress. It will be built by the general contractor, PORR. With the PORR Living proposition.
Yeah.
That gives us then also a showcase that we can, similar to the Leopold Quartier as the first urban timber hybrid one, show around to everyone. We are making good progress, and as I said, it's a nice project, 90+ apartments, eight stories. It will be almost a showcase in every respect, including balcony, photovoltaic power stations, and what have you. I've seen the mock apartment built up, and it's quite amazing.
It's a different thinking, and this is why we are talking about the shift in paradigms that is currently taking place when it comes to housing. The other question was how advanced are we with the execution of our strategy? Well, it was pretty quickly adopted by everyone, because the market is waiting for it. We are solving a problem that our society has. I'm not sure if everyone is aware, but I keep on pointing out this The Economist article. Across Europe, okay, we see strengthening of extreme political powers abusing this topic.
It's not only migration, it's predominantly people from the countryside that move to cities in order to get work opportunities. We have shortages throughout Europe. The answer can only be, let's propose a product that is constructed, or I should rather say, put together differently than it was the case in the past. By this, reduce production costs significantly without offering something that is dissatisfying. The contrary is the case. I really loved the apartment. I think that the standard bathrooms are just perfect, or this idea of an X box is-
Right.
You ask yourself, why hasn't this been invented earlier? The reason for it definitely is because there was not enough pressure on this topic. Now, it's boiling damned hot. Once we start with it, the beauty is it's very scalable because there is interest from all stakeholders. Be it financing banks, be it investors, be it interested people who want to rent. We even got calls or messages asking, "Where can I rent something of this kind?"
I'm pretty optimistic that this is going to fly quicker and higher than everybody at the moment imagines because there was a lot of talk about it in the past, okay, but nobody was coming up with the proof. Now we have several construction companies offering these magic EUR 2,000/ sq m livable area above ground. We are not even counting on scale effects, which are definitely going to kick in if you order, I don't know, instead of 500 Slim walls, 50,000 Slim walls. I'm not kind of sci-fi talk. This is a reality, and this is going to be a reality soon.
Okay. Thank you.
Sure.
Thank you for your questions, Mr. Bruns. As no further questions are coming in by now, I will hold the room another moment. We come to the end of today's earnings call. Thank you everyone for joining and your shown interest in UBM Development AG. Please feel free to contact investor relations with further questions. A big thank you also to you, Mr. Winkler and Mr. Thate for your time, and all the best to you, Mr. Rainer. I wish you all a successful day, and I'm handing back over again to Mr. Winkler for some final remarks.
Thank you. Thank you very much. It's a beautiful summer day here in Vienna, and I guess it's a beautiful summer day almost throughout Europe. I understand that everybody's already dreaming of the holidays and vacations. We will not have too much of a holiday, and I ask you to at least keep an eye on the news channel, and our social media, where we will report over the course of summer what progress that we have been making in terms of sales. With this, thank you very much for your attention and the very efficient and smooth conference call, and have a good day. Bye-bye.