Release Date: August 27, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Branicks Group AG (DDCCF, Financial) successfully reduced its bridge financing from EUR500 million to EUR40 million, demonstrating effective debt management.
- The company sold 15 properties for a combined EUR361 million, highlighting the high quality of its real estate portfolio.
- The commercial portfolio showed positive momentum with stable and predictable rents, benefiting from rent indexation.
- Institutional business recorded a 2.5% like-for-like rental growth, maintaining a strong second pillar of the business model.
- The partnership with Encavis in the renewables asset class has the potential to support profitable growth in this segment.
Negative Points
- Net rental income fell to EUR77.1 million, primarily driven by the sale of retail properties.
- Letting performance declined by 30% year-on-year to 180,900 square meters, mainly due to disposals.
- Assets under management decreased from EUR12.5 billion to EUR9 billion, impacted by disposals and the end of a larger property management mandate.
- Net interest expenses increased due to restructuring of liabilities, resulting in higher interest costs.
- The company reported an FFO of EUR19.4 million for the first half of 2024, reflecting a decrease from previous periods.
Q & A Highlights
Highlights of Branicks Group AG (DDCCF) Earnings Call Transcript
Q: What is the roadmap for increasing the share of green buildings in your portfolio?
A: We have a clear roadmap to reach 70% green buildings within the next three years. We have already doubled our share to 43.6% and have a professional department in place to analyze and realize these changes without requiring billions of euros. (Sonja WÃĪrntges, CEO)
Q: What can we expect in terms of office transactions in the second half of the year?
A: We aim for disposals of EUR650 million to EUR900 million, with a mix of office, retail, and logistics transactions. The market is slightly improving, and we have processes in place for various asset classes. (Sonja WÃĪrntges, CEO)
Q: Can you explain the decline in new lettings and the impact on lease terms?
A: Tenants are staying put due to the current crisis, leading to stable renewals but fewer new lettings. New contracts are often linked to ESG requirements and office design to attract employees back to the office. (Sonja WÃĪrntges, CEO)
Q: What are your expectations for fees from the new renewables asset class?
A: We expect fees to start coming in 2025, but not in high numbers initially. We are working with strong interest from investors and a solid partner in Encavis. (Sonja WÃĪrntges, CEO)
Q: Can you provide more details on your debt profile and upcoming maturities?
A: The EUR225 million promissory notes have been extended to June 30, 2025, with the remaining amount due in the third quarter of 2025. (Sonja WÃĪrntges, CEO)
Q: What are the net proceeds from the two transactions post-reporting date?
A: The net proceeds from both transactions are EUR351 million. (Sonja WÃĪrntges, CEO)
Q: What are the current funding costs for secured and unsecured debt?
A: We are discussing secured debt at around 3.75% to 4%. (Sonja WÃĪrntges, CEO)
Q: What is your guidance for the Interest Coverage Ratio (ICR) by year-end?
A: We expect the ICR to remain around 2.0 by the end of the year. (Sonja WÃĪrntges, CEO)
Q: Why didn't you fully repay the bridge financing given your liquidity position?
A: We aim to maintain a solid cash position for the company and will reduce the bridge financing in the coming months. (Sonja WÃĪrntges, CEO)
Q: What is the impact of the EUR150 million impairment charges on your transactions?
A: The impairment charges are around 20% of the book value and are related to specific transactions. We do not expect a high impairment for the total portfolio, estimating between 5% and 8%. (Sonja WÃĪrntges, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
