S Immo AG

VSE:SPI

Earnings Call Transcript 2020-Q1

[Operator]

Good afternoon, ladies and gentlemen, and welcome to the S IMMO Conference Call regarding the first quarter results 2020. [Operator Instructions] Let me now turn the floor over to Mr. Vejdovszky.

[Ernst Vejdovszky, executive]

Good afternoon, ladies and gentlemen, and welcome to our conference call for the first quarter of 2020. Clearly, most discussions evolving around the implications of the corona crisis these days and how companies are affected. We will give you some more insights into this during our presentation. For now, let me tell you that operationally we had a formidable start into the year. That we managed to lock in a capital increase at market prices and that we improved both our cash base and our LTV. With our well-diversified portfolio, including a significant portion of residential properties, a strong cash and equity base and our close connection to markets and tenants, I'm convinced that S IMMO is very well prepared to weather the storm of the crisis. Especially, as there are already first signs of normalization with restaurants, shops and hotels having opened up or opening soon and people getting back to a regular life in a responsible manner. But let's now go to the results for Q1. Starting with the development of some of our KPIs. Our FFO I increased by as much as 27.8% to a level of nearly 15 -- EUR 14 million for the first quarter. And this is the highest FFO I we ever had in the first quarter. Rental revenue increased by nearly 10% to EUR 31.1 million. To continue with our operating performance EBITDA improved by 9.4% to as much as EUR 21.4 million. I believe those 3 numbers illustrate the fantastic start into 2020, however. Even though, March was already partially affected by the COVID-19 situation. This shows in our property relations, which amounted to an overall devaluation of EUR 31.5 million. To put this number into perspective, we are talking about 1.3% of our total property book value. To enable you to get a feel for our resilience, we have also grown our cash position into the list. This amounts to EUR 232.1 million and clearly shows that we have quite a big reserve. But let's now move on to the details of our P&L. You can see that total revenues increased from EUR 47.8 million to EUR 50.6 million or nearly plus 6%. Even though our hotel revenues were already impacted by the corona crisis. Overall, our GOP has improved by 7.5% and went from EUR 24 million to EUR 25.8 million. And EBITDA, also a good measure for operating performance, improved by 9.4%, reaching EUR 21.4 million, while last year we were still below EUR 20 million. As you heard earlier, this very nice operational result is also backed up by our FFO. Moving on to Slide 4. You can see negative valuations, I just mentioned. Clearly, this is an outcome of the corona crisis and still contains many uncertainties. As for the composition, minus EUR 8.6 million come from Austria; EUR 22.9 million from CEE; and Germany came in with a slight plus, about EUR 20,000. This surprisingly good result is due to the sale of a single property that we managed to conclude in the middle of the corona situation. So I would say that things are not -- be as bleak as it may seem. With just the operating results of 1 quarter, which could not offset the negative valuations and ended up with an EBIT of minus EUR 12.5 million. On the financing side, we went from negative EUR 9.7 million to a net expense of EUR 13.2 million, which is mostly due to noncash FX effects relating to the devaluation of the forex. As deferred taxes typically run counter to property valuations, we had a cumulative gain on the tax line in the amount of EUR 4.3 million. Due to noncash effect, therefore, we ended the first quarter with a loss of EUR 21.4 million. Flipping over to Slide 5, you can see that historical development of our NAV. Our EPRA NAV developed from 70 -- EUR 17.63 at the end of 2017 to as much as EUR 26.45 per share in 2019. With the impact of the current situation upon our quarter results as well as on the valuation of our IMMOFINANZ and CA Immobilien investments, EPRA NAV as at the end of Q1 decreased to EUR 23.31 per share. This is a level still significantly above our current share price. Percentage-wise, EPRA NAV decreased by about 12% in the first quarter, and the book value went down by about 8% to EUR 18.67. Moving on to Slide 6. You can see the development of our share price from the beginning of 2017 to the end of 2019 in comparison to the ATX and IATX. With a performance of 125%, we clearly beat the general market as expressed by the ATX and also our peers by a big margin. But how did the onslaught of the corona crisis impact our share price. This is shown on the next slide, where you can see the share price development since the beginning of the year. Generally, also in Q1, we continued a trend that we have had for many years now, namely that we outperformed the market quite a bit. Of course, like everybody else, our stock took quite a hit and devalued by about 21%. So significantly more than our EPRA NAV and NAV, which only went down by 12% and 8% in the same period. Also, if you compare our share price to the development of the IATX and ATX, you can see that we were far less impacted than the market.

Let's now take a look at our financing. You can see that our cost of funding, including bonds came to 2.28%. The average weighted final maturity of our long-term loans amount to 5.4 years. We also can draw on credit lines of EUR 83.3 million if need be. A reserve that is currently completely unmoved. Despite the negative valuations, our LTV went down once more and came in at 44.7%. Splitting it up, the LTV for secured financing was 34.1% and the LTV for unsecured financing came to 10.6% as a result of the significantly broadened cash base. On the next slide, we'd like to give you a bit more insight into our investments in CA Immobilien and IMMOFINANZ. Both companies are valued at the market price and had a book value of EUR 412.8 million at year-end. The valuation of both shares is booked for a comprehensive income and does not impact our P&L revaluation. The cumulative purchase price for those investments was about EUR 413 million. So far, we received EUR 36.4 million in dividends. So overall, even in this time of crisis, which we hope will be over soon, our investments are still positive. And with that, let me now hand over to Wilhelm Bayer, who will walk you through some more details of our portfolio and who will also talk about the COVID situation.

[Wilhelm Bayer, executive]

Thank you, Ernst. Good afternoon, ladies and gentlemen, and a warm welcome also from my side. Yes, 2020 has indeed been completely unexpected so far. Challenging weeks with a lot of restrictions and limitations lie behind us. Things beginning to look better now. And in Austria, for example, restaurants have been reopened a few days ago and hotels will follow at the end of this week. So forecasts are still very uncertain, but I strongly feel that the worst might be behind us. We certainly have an experienced and competent crisis tested team in all markets and are constantly in close contact with all of our shareholders and stakeholders. So let me guide you through some details of our business. We have summarized some key facts of our property portfolio for you. First, our rent generating properties have a total usable area of 1.2 million square meters, an overall rental yield of 5.3% and an occupancy of 94.4%. Our portfolio consists of almost 30% residential properties and 70% commercial properties and has a total book value of roughly EUR 2.4 billion as of March 31. Now coming to the next slide. Germany and Austria amount for a share of 68% of our portfolio and the CEE, which consists of another 6 EU member states, accounts for 32%. In Germany, we are not only present in Berlin, but we -- as you definitely know, we have expanded like to Leipzig or Erfurt over the last few years. There we definitely identified significant potential. Flipping over to Slide 12, I'd like to give you a snapshot of our portfolio by region. In Germany, we hold a total IFRS value of EUR 1.17 billion, have a vacancy rate of 6.1% and a rental yield of 4.5%. In Austria, the book value is approximately EUR 444 million, the vacancy rate stands at 6.8% and the rental yield is 4.7%. In CEE, total book value amounts to EUR 748 million with a vacancy rate of just 2.6%, we are nearly fully let and the rental yield amount totaled 6.7%. Today-tomorrow -- now, obviously, talking about tomorrow is quite crucial and important in times like this. At the same time, focus are particularly tough to make in the current circumstances. For the impact of the COVID-19 pandemic on the results for financial year 2020 cannot be reliably determined at this moment of time. Factors such as the length and impact of the lockdown restrictions and the possible second wave of infections, the economic consequences in different sectors, but also the amount of government support programs throughout the countries that we are invested in, are just some of the many, many uncertainties that we all are currently facing. On the following slides, I will give you a brief evaluation. Just a flash slide on the consequences resulting from the current COVID-19 situation. So obviously, the global COVID-19 pandemic affects us and our business, but the intensity varies depending on the different markets, on the different sectors and the different type of use. However, it is fair to say that the hotel segment has been affected quite severely. Overall, the effect on our business were manageable in the first quarter 2020. April hit us definitely harder, but we also have seen first improvements in May already. This gives us hope for a significant recovery in the second half of 2020. So it's too early to properly predict the extent of the impact this crisis will have on our financial year 2020. The overall impact will mainly depend on the duration of the crisis and the step-by-step reopening of the countries, which will be the general basis to generate profitable turnover again. On the next slide, we give you a quick overview of the current situation in our markets. So most of the countries, we are invested in have loosen the lockdown restrictions significantly over the last few weeks already. In Austria, we can see that all shops are open since the beginning of May. Restaurants follows in the middle of this month. And at the end of this week, also hotels will be allowed to open their doors, again. In Germany, the decisions on various restrictions lie in the competence of the federal space; in Berlin, for example, retail, restaurants and hotels were already reopened. In CEE, countries like Croatia or Hungary or the Czech Republic and also Slovakia show a pretty similar situation to Austria. So debate on gradually reopening the borders are currently conducted.

This slide makes also obvious that Romania has the most challenging situation. Most of the retail units and shopping centers are still closed with the exemption of food stores and pharmacies and so on. Restaurants are still closed as well, and at this point, it is really hard to predict when the Romanian government will start to loose the restrictions in Romania. And I will get back to Romania later on as well.

You can see on the next slide, the composition of our portfolio, excluding land bank for the various types of use based on book values, clearly with almost 41% offices accounts for the largest share, followed by residential with 30%, retail was 20%, and finally hotels with 9.5%. And as I said before, not all types of use are affected in the same way. Residential and offices are the most resilient and much more resilient. Nevertheless, the wholesale and retail industry will be affected severely. Our aim is to reduce costs, not only in the segment hotels as far as possible, among other things, includes, for example, the reduction of operating costs in a reasonable way. On the next slide, you can see the composition of our rental income across the types of use for the first quarter of 2020, so 25% or EUR 7.8 million of rental income related to our residential portfolio, hotels account for 2.1%, retail for 38.6% and offices for 34.3%. Residential and office building, as I already mentioned, were only slightly affected by the COVID-19 crisis. Retail and hotels were hit especially hard.

Although we just brought the figures for the Q1. For April, we were able to collect more than 80% of rents in Germany and Austria and more than 50% in the CEE, maybe even significantly more due to further ongoing negotiations. We are still in negotiations on the finalization of the legal documentations with many of our tenants. And therefore, we cannot calculate the final rent collection for April and May yet. We are in negotiations with roughly 10% of our tenants, so almost 600 tenants we are talking to out of 6,400. And the majority are retail tenants in our Sun Plaza.

In Romania, the law provides rent-free periods in case of a so-called force majeure, then the rental ratio will be extended for this rent-free periods. Also the footfall in Sun Plaza decreased dramatically. So even shops that were open like the food chain core, for example, had to deal with this significantly lower turnover.

In the other CEE countries, we do not own big retail units like Sun Plaza. Mostly the ground floor shops and small retailers and restaurants were affected. So here, we are willing to support those tenants beyond our legal obligations because these units are very important to support the supply of services and therefore, also the attractiveness of our buildings there. In Austria, so roughly, we expect closing retail rents for roughly 6 weeks and in Romania approximately 2 to 3 months, we will see. Hotels are obviously the most challenging field right now in Hungary, and the Czech Republic's hotels have already been reopened. But as you can imagine, the occupancy rate is very low. And we are talking about up to 10 rooms per night to give you an idea. Austria's hotels will open at the end of this week, but we also expect the occupancy rates to come in at the very low level at the beginning. But as soon as planes are flying again and perhaps you have know -- you have heard that Lufthansa has started already to do so, as one example. Things definitely will improve in this also very cyclical segment as well step by step. So we are in constant contact with almost all our tenants, trying to manage this crisis together, especially for the common and long-term approach. We will be ready to support them in a fair and mutual manner, but we also encourage them to use the different support programs provided by the various governments, which all will be finally calculated at the end of this year. We definitely make sure that for all deferrals or rental reductions we will get at least corresponding trade-offs, for instance rental expansions.

In this context, I'd like to mention that also our longstanding approach to have very good relations with our clients, partly for decades already pays off in these days. We have very constructive discussions and reasonable negotiations. And this is heavy work. So all have to be brought back [indiscernible] and signed on paper again. And we do have resilient and renowned tenants. We do have high-class buildings at established locations. And clearly positive is that we will come out of this crisis together in a positive way. As quickly as possible and with the utmost possible and manageable efforts.

As Ernst has already presented to you in this call already earlier, we have a negative revaluation result in the first quarter of 2020, and revaluations are typically based on 2 main factors, so the estimated cash flow loss and the yield shifts. In CEE, we see a shift in prime yields between 0 and 50 basis points, depending on type of use and the country. This led for the revaluation result of roughly minus EUR 23 million, as Ernst already mentioned. In Austria, prime yields shifted between 0 and 15 basis points. In Germany, we -- there were no apparent yield changes, but moderate negative effect of rental losses. There we compensated by a sales-related appreciation, bringing the revaluation result for Germany to plus EUR 18,000. Overall, as the revaluation result came for a minus of EUR 31.5 million, which corresponds to the -- which corresponds, let's say, to roughly 1.3% of our IFRS portfolio.

Flipping over to the next slide regarding our balance sheet and liquidity as of March -- at the end of March of 2020, the equity ratio was at 44%. The cash and cash equivalents amounted to around EUR 232 million, and our LTV stood at a very comfortable 44.7%. So considering these factors and our diversified portfolio, we are very well positioned. And I'm pretty sure that we have a solid foundation. And we are also sure about one thing this crisis will definitely bring chances. So we will face several opportunities in the future, and we have the power and the financial strength to take these chances at the right time, so this makes us pretty optimistic for the year 2021. And speaking already about 2021, let me now give you a quick outlook. You know that our decisions are made on a daily basis, and the basis is for daily work, and the decisions we make will shape also S IMMO's future. We seek out attractive investment possibilities. We assess purchases and sales. We compare opportunities and risks and wait for the right time to make our moves all while constantly pursuing the clear goal of creating sustainable value for all shareholders. On this next slide, I will give you a quick update on our acquisitions in Germany. You can see some details regarding our land bank. Up to now, we have signed purchase agreements for more than 2 million square meters of undeveloped plots of land in the commuter belt of Berlin. Currently, we are -- we have around 30 projects for medium and long-term developments. Mostly we are striving for residential usage. The average acquisition cost amounted to roughly below EUR 14 per square meter. And this picture shows the charming water sides around [indiscernible].

We are able to work on these projects in the meantime, and all projects are in different, mainly early stages of planning, zoning, discussions with authorities and about elaborating the most possible value for our shareholders in the mid and long run.

On the last slide, I would like to give you a glance into the future. S IMMO has been pursuing a sustainable and prudent business policy for more than 3 very successful decades with the aim of constantly creating future income. We apply a business model that is directed towards 3 dimensions of time, anticipating property cycles and benefiting from them. In the short-term, we evaluate at what time it makes economic sense to buy standing properties that generate immediately revenues. Currently, we are only investigating very selectively, but in all our markets.

In the medium-term, we search for properties that enable a quick planning and construction progress. This means that the project is ideally completed within 3 to 5 years. At the moment, we don't have project developments under construction, but we focus mainly on zoning and planning activities. And here, we can report the first positive step of zoning for our office site in Budapest even in these times. On a long-term perspective, we buy land banks for which the value creation process takes up partly 10 to 15 years. So to this end, our local experts continuously monitor the markets where S IMMO operates and anticipate trends in the property sector.

For now, I would like to thank you for your attention, and we are looking forward to discussing your questions right now.

[Operator]

[Operator Instructions]

And the first question for today comes from Stefan Scharff, Who's calling from SRC Research.

[Stefan Scharff, analyst]

Stefan Scharff from SRC. I have some questions about the revaluation side, as this is the main driver of your bottom line results. Though CEE was a minus EUR 23 million, perhaps you can say a little bit more about the split of CEE. I could imagine that Czech Republic is, let's see, let's say, 30% or something. You have 2 hotels in Prague at the vantage spots. And also, Romania is a topic as you have Sun Plaza Shopping Center, as you already mentioned, and you also have a Novotel there. So yes, perhaps you can give us a more detailed split here.

[Wilhelm Bayer, executive]

Yes, Stefan, this is Willy here. To answer your question, your guess was quite to the mark. The hotels in the Czech Republic are affected. And are one of the biggest chunks of devaluations. They are about 1/3. And another piece is Hungarian office, where we saw quite some yield shifts. And yes, let's see if it really -- how this will continue. So those 2 are the biggest drivers. In Romania, actually, as the Hotel Novotel is carrying the cost, there is no impact on our P&L or balance sheet because we are quite far from an impairment there.

[Stefan Scharff, analyst]

So it's only the Sun Plaza and the offices at Sun Plaza?

[Wilhelm Bayer, executive]

Exactly. But that's not affected big time. The major pieces do come from the Czech Republic for the hotels and from Hungary.

[Stefan Scharff, analyst]

Okay. And so do you have some short rentals or delays in rentals in Hungary or in some other CEE countries except for hotel business, where you can say this was a driver for your decision to bring down the valuation?

[Wilhelm Bayer, executive]

No. No, no. Definitely not, not regarding rental shortages. It was just the yield shift for Budapest. We don't know why, but we have to adapt to that. But what we have also seen, we have signed 3 rental -- 3 office rental contract in Budapest during this time, yes. So it's even possible to sign new contracts also in Hungary. And regarding offices and residential, we definitely see that it's not affected that much like hotel business or retail.

[Stefan Scharff, analyst]

Okay. Okay. And with regards to Berlin, you have a lot of land reserves there, about 2 million square meters around Berlin. So at the moment, you are quite cautious. You don't do much in develop -- in terms of development. You just prepare the project for a later stage?

[Wilhelm Bayer, executive]

We are pretty active on that because we can do this kind of office homework, I would say, together with our architects and also the discussions with the official authorities are progressing. So as we know that this takes a lot of time to do this kind of development, and it's the pre-stage or the stage to get the zoning, to get permissions, to get even the changes of existing zones. So this will definitely take some time. That's the reason why we see that kind of 2 million square meters in the mid and long run. Definitely, 3 to 5 projects we will present in one of our next presentation to give you idea of the update. This might be coming a little earlier. This means in 3 to 5 years' time from now. A few more times -- a few more projects out of these 30 projects will be a time schedule between 5 and 10. And I would say the most are still longer to work on, more than 10 years' time.

[Stefan Scharff, analyst]

Okay. Just one follow-up question. Hungary, you mentioned that you accept some new rental contracts, that could also mean that if you have a good square meter price here, and you have some offices there with a high occupancy rate, almost all of them are 94% or higher. So that's quite a lot. So is there a chance or there might be a chance that you get the better revaluation picture in the next quarter for Hungary and bringing back the millions you miss now in the first quarter?

[Wilhelm Bayer, executive]

This is definitely too early to say, Stefan, on that. Let's keep the fingers crossed, but the trend follows what we have seen in the past quarters [indiscernible] that the office tenants are quite looking for more space. I guess that now the expansion plans of the big companies are now, let's say, a little bit postponed. Everybody is looking what is going to happen. And definitely some of the sectors are much more influenced. So if you have an airline as a tenant or if you have, let's say, tourism agency as a tenant then definitely these companies will be affected much more and we have to see how they could survive or how they will survive. So -- but, nevertheless, the offices are much more stable than the 2 other segments. So we are happy that we are somehow diversified on these segments.

[Stefan Scharff, analyst]

Okay. You have to shift your AGM. Do you have a new date for AGM? And is your plan more to make it on a personal way or more virtual AGM?

[Wilhelm Bayer, executive]

So -- our original scheduled date was the 24th of April. That was simply not possible. And okay, other companies have already announced dates, but we decided to get a clear picture about the situation before committing specific dates. So we will announce it at the moment when we know how and when.

[Operator]

The next question we have for today is from Jakub Caithaml. He is calling from Wood & Company.

[Jakub Caithaml, analyst]

Jakub here. A couple of questions from my side as well. Following on Stefan, I wanted to ask if you could expand on the revaluation loss specifically. You detailed the yield shift, but has there also been a rent kind of estimated trend value movement involved in the underlying operations of the appraisals? And if you could also kindly, perhaps not necessarily per country, but rather per segment detail where have you seen -- what degree of yield shift and the ERP moved that that would be very helpful.

[Ernst Vejdovszky, executive]

Well, the huge shift, I guess, we have already announced in the presentation. So there is no big yield shift in -- up till now in Germany. There is this -- surprisingly this yield shift between 0 and 50 basis points in the CEE region and especially in Budapest 50 basis points. You really have to ask the official appraisers, how they calculate that. We will definitely see the more precise valuation results by the half year results, where we also will appraise our whole portfolio by external appraisers. So regarding the first question, Willy, perhaps you can quantify this.

[Wilhelm Bayer, executive]

Okay. This is the general feel for what we did, what we did. I mean, you guessed right, could be -- we did a mixture of both. We took yield shifts into account, and we also took into account projected rent losses, as they couldn't be sure of it at the time. So we actually took, if you will, a prudent approach to factor both things in, which I think also was called for. And like previously said, the 50 basis points is for Hungary, and also, it's probably the highlight. It's at the upper end of the yield shift we saw percentage-wise from the -- if you consider the base. But we took a similar approach. We looked across our whole portfolio, across different use types and cities. And that's how we came up with our estimate on yields and of course, also on rent losses.

[Jakub Caithaml, analyst]

Right. Right. Understood. I mean, this bit regarding the Budapest offices is indeed coming as a surprise to me also. I mean, as we were thinking that the higher end of the range that you said in the presentation would be concerning the Sun Plaza Shopping Center in Romania. Regarding the Romanian retail could you help me understand whether it is really just like a blanket rent holiday or is it some form of a deferral? So does it mean that under the current legislation, the tenants, which have had their shops closed during the period and still have are completely off the hook? Or will they be kind of liable potentially to pay part or full amount back at some point?

[Ernst Vejdovszky, executive]

Yes. This is -- if we could answer this clearly, this would also be in favor for us. The legal situation is not 100% clear in general. Tenants are allowed not to pay rent, any rent, which we are forced to close down, yes. Nevertheless, we are in good contact, good, let's say, negotiations with them. And we have to bring this also down to the paper and to the contract. So for April, for example, we haven't invoiced the rents for these tenants -- yes, for April. We are still in negotiation, how we can solve the problem on a, let's say, a broader scale also for the rest of the year. And that brought us to the assumption that we expect somehow 2 to 3 months of rent reductions for this tenant. Nevertheless, in this force majeure case from the legal point of view, these tenants are allowed not to pay rents, and it will be so-called ended -- or added to the end of the contract. So this is one legal -- very complicated key, write it down and negotiate and sign it. But nevertheless, we have very good, let's say, talks to our tenants. They know us also from the 10 years ago when we had to talk about the financial crisis situation. And we want to help them, and they are very convinced about the location in the Sun Plaza because we have also a line of tenants who are willing to enter our shopping center, and we are fully let at the moment. But we will have to see how the Romanian government starts the reopening on -- of all these kind of retail and the restaurants. So it's definitely the worst case for us, the Romanian situation.

[Jakub Caithaml, analyst]

But not all shops are closed...

[Ernst Vejdovszky, executive]

Not all. No, no. I just -- yes. All the food stores are open and Cora is open, all the pharmacies and the drugstores and some service shops as well.

[Jakub Caithaml, analyst]

Right. Right. Right. Understood. And regarding the tenants in Sun Plaza, where the situation is perhaps the most difficult among your portfolio. Have there been so far any bankruptcy at all? And also, perhaps on this topic, with respect to your -- the tenants of the hotel properties, if any of them facing like a life or death situation? Or do you think that for the hotels, the worst can be and will -- is likely to be averted?

[Ernst Vejdovszky, executive]

At the moment, we haven't seen a bankruptcy honestly to say. You also should bear in mind that especially the retail schemes is a very cyclical business. And the most of the turnover is done in the Christmas time. So definitely, many of the companies to the biggest portion of their turnover is in the Christmas time. So still, we are in good hope that this will be done for this year, and it will be able to make the turnover then, at least a big part of that yearly turnover. And so far, definitely, you also have to bear in mind that we had 4 very brilliant years in the past. So normally, all of these tenants should have also put a little bit of money aside for bad days, I would say, as we did, but also some smaller tenants and owner-based tenants definitely will have more problems than the big international retail chains. The same situation for the hotels, I would say, for example, the Novotel was the only hotel, which was open of all aqua hotels in Budapest -- Bucharest, sorry. So all the Bucharest, let's say, guests were placed to Novotel. Nevertheless, it was a very low occupancy still. And what we see and what we have, we have brilliant locations in Prague, in Bucharest and in Budapest and Vienna with our hotel. So definitely, what we have seen during the financial crisis and also during the 9/11, it took some time, and we would expect that it will take more time for the hotel, especially for the, let's say, that business hotels, we have to wait till the planes are flying again and the businessmen are traveling again. Nevertheless, Romania, as the example, still many people from the Romanian counties are driving by car to Bucharest and they have to stay in the hotel before they go back home. Definitely, we will see much more time, and the experts from the Marriott, they speak about 2 to 3 years' time that we will see the same figures from 2019, but we do not expect bankruptcies in the hotel segment so far.

[Jakub Caithaml, analyst]

Right. Regarding the individual segments, I mean, especially, I guess, offices because with retail, you just said that you haven't invoiced April yet. Can you talk about the collection rate in the -- April, I guess, is the most relevant one? And also, do you have any data in your offices on kind of how many people are in there comparing to how many people would be? Or to the kind of level of traffic, how do the tenants use offices comparing to pre-COVID? What is the level of activity?

[Wilhelm Bayer, executive]

True. This is quite a difficult question because we do not have accounting measurements in the offices, but we have accounting measures in the Sun Plaza. So there we can count the footfall. On the collection rate, I already mentioned that for April we have collected more than 80% of our retail and -- for retail brands, and from the office, it's also -- mostly rent in the office segment is calculated -- is collected. Some of the companies, it's difficult to say because there are different ways of paying, yes. Some tenants pay monthly, some pay -- some tenants pay quarterly, some tenants pay a half year in advance. You cannot -- that's the reason why you cannot precisely calculate it now. And we are -- also some tenants paid with the restriction that they say in case if it's not legal for them or if they would have the chance and would not have to pay the rent at all due to legal situations, they would claim it back. So as I mentioned, more than 80% were collected in Germany and Austria, and we are very pretty, let's say, optimistic that even more we will collect in the meantime due to the negotiations and the closing and signing with the legal actions -- activities. And definitely in the CEE, we have collected roughly 50% in April. And it looks like -- or 55% -- 50% -- between 50% and 60%, I would say. And it looks like that the situation might be the same in May. So for especially in Austria, we expect that roughly 6 weeks of rental rents -- or the hotel rents will not be paid or will be postponed or will be deferred. And we expect for Romania, approximately 2 to 3 months of rental payment will be deferred or reducted up till now. But please don't fix me on this data. We will know much more at the end of the Q2. On the half year results, we will know more. And finally, we will -- the final date, we will know at the end of the year, when we also -- because every tenant has to open his books, we want to see the cost structure of the tenants. We will also see the subsidies they have -- get from the states, from the different countries. So there are different ways of subsidizing the tenants. And all this has to be calculated in also our ways of treating them including some other trade-offs. If we grant them deferrals or if we grant them reductions, then definitely, we will also have some trade-offs with every tenant. And this is working quite good, right. And we definitely will have our tenants because we are looking for a long-term partnership as in the past.

[Jakub Caithaml, analyst]

Great. Right. Final question for me, and sorry for taking a lot of time. You mentioned a disposal of a property on the call, which has been closed in the midst of the COVID crisis, if I understood correctly. Could you give us more details on the deal, especially, I mean, assuming that this is a transaction which has been launched and the discussions have been had before the outbreak escalated whether there has been any sort of adjustment to the price agreed originally and the price at which it was actually concluded? Plus like what kind of property and which jurisdiction are we talking about? And perhaps more broadly, we were talking about a yield shift in Budapest, which I don't think -- and correct me if I'm wrong, I don't think it has been underpinned by transaction evidence. Do you see any transactions going on in any of your relevant markets? And if so, could you share some feedback on how the pricing is evolving?

[Wilhelm Bayer, executive]

Yes. Jakub, maybe we do see transactions, also the valuer -- the appraiser sees transactions. They are limited, of course. They're not many. That's a fair point. And the other thing is, of course, we don't know and also the appraisers don't always know, of course, when those deals were signed. So there's a natural time link between signing and the actual closing of the transaction. But I'm sure that behind some of those yield shift assumptions, there's also like actual transaction of just guess work, Jakub, for the appraisers. As to your question, we're talking about the property in Berlin, in Germany, which is a land plot with development potential, of course. And we -- in Q1 we're able by getting some obstacles out of the way in -- that are very local, I would say, to actually get the better price than we had valued the building for at year-end. This is why we had -- well, percentage-wise, significant increase that actually allowed us to offset the -- also negative valuations, which are very limited, of course, because there was no yield shift assumption for Germany for the rest of the portfolio. So Berlin, Germany development plot, and I do believe that the appraisers have some limited transactions as guidance.

[Operator]

Next up, we have Milosz Papst, calling from Edison.

[Milosz Papst, analyst]

You've already elaborated quite extensively on the situation in the health sector, but maybe you could just briefly discuss the situation of your 2 Marriott hotels in Vienna and Budapest in terms of the new bookings and cancellations we see for the second half of the year and maybe any cost reduction measures you've introduced and any state support you might actually receive for these properties?

[Wilhelm Bayer, executive]

Yes. The Budapest hotels, the Hungarian was open the whole period of time. The Vienna Marriott is going to open at the end of this week. Both hotels definitely are, I would say, one of the best hotels in the market. What we have seen also in their record resides still in January and February. And then, yes, everybody knows the story what happened. So the -- all the bookings were now postponed in the second half of this year. Definitely, it's -- we are not sure if this could happen. And as long as the planes are not flying, it's pretty difficult to bring in the business man to Vienna and also to Budapest. But there are also some positive signs, as, for example, that the Formula One is going to be held in Austria and later on also in Budapest, and we have, for example, 3 Formula One teams in our hotel in Budapest. So still, there are a lot of bookings expected for the second half. But if -- I would say, if all the big groups all canceled from China, for example. But there are also some good signs from China as well. And the very experienced hotel managers, who are leading both Marriott hotels are, let's say, one of the best experts to do that. And they have been also -- or at least the guy in Vienna, Mr. Fenz has been responsible to overcome the financial crisis 10 years ago, and he did a pretty good job not only then, but in the meantime as well, as we have record years for the past few years, although we have, yes, modernized and renovated both hotels in the meantime. So this was also the reason why we have been very, very good located, very well established houses with a very good reservation systems from the Marriott International reservation system. So this makes us pretty sure that in case the hotel business is going up again, then definitely our both Marriotts will be very profitable again. But also in case a second wave is appearing or the big congresses cannot be held, then definitely it might be -- at least it will take a little longer. But as you might have heard that also Austria allowed, let's say, meetings, again, with more than 1,000 people starting with the 1st of August under certain conditions. And this gives us quite a big hope. And all the restaurants are very well booked again -- all is for the candlelight dinner that branches the champions bars, and both hotels are pretty well booked. So at least this gives us the confidence that the business will come back as soon as the surrounding conditions are improving.

[Operator]

There are no further questions at the moment. [Operator Instructions] And we have one more question from Andre Remke, calling from Baader Bank.

[Andre Remke, analyst]

Only 1 or 2 questions. You mentioned potential opportunities emerging going forward. At what point of time do you believe this could be the case? And then which markets or asset classes could be this as a case? Or are you mostly interested? I know it's maybe too early, but you're already screening the market very closely and looking for opportunities. So maybe you could provide us with your, let's say, experienced views of it?

[Ernst Vejdovszky, executive]

So I think it's too early now. I think the opportunities will arise at the end of the second half of the year.

[Wilhelm Bayer, executive]

Yes. As Ernst said, it's -- at the moment, definitely, we are just, let's say, shopping around, looking around, considering how the market moves and where the transactions are, if there are any at all in -- for example, in CEE. But definitely, we will concentrate on the office segment. In the CEE region, as we did before, and you know that we had some bigger projects in the pipeline for the capital increase, which we did at the beginning of this year. But it's definitely too early. We have to wait until the forecast disappeared that we can see clearly for a longer time, not just for a few weeks right now. And definitely, it will take some time until we have a medicine or at least some kind of, let's say, confidence of the people, again, that they are willing to shop again and to travel again. So it will take -- until we don't have the medicine, I think it will -- we still have to wait. But if there are opportunities arising and appearing in the second half of the year, definitely, we'll have to look on [indiscernible]. We will be ready to move very quickly as we have the cash on the balance.

[Andre Remke, analyst]

So in other words, you could not completely rule out investments in the second half of the year, but it's more likely for next year. Is it right to assume?

[Ernst Vejdovszky, executive]

Maybe at the end of the second half of the year, it's possible. I think I'm optimistic.

[Andre Remke, analyst]

Okay. Okay. Then the last question, you -- again, on your AGM -- the postponing to AGM. Do you still plan to pay the EUR 0.70 dividend? And what could be factors to reconsider this?

[Ernst Vejdovszky, executive]

But this is not an issue at the moment. But we have to consider, let's say, a couple of weeks before the AGM. But at the moment, the decision is EUR 0.70.

[Operator]

There are no further questions at the moment.

[Ernst Vejdovszky, executive]

Okay. If there are no further questions, then I would like to thank you for participating in our today's call. We are looking forward to the next conference call regarding our half year results. Until then, let's jointly go the step-by-step journey back to a new form of normality, and let's hope that the number of positive signs and news keeps increasing. Have a healthy and safe summer, and all the best and bye-bye from Vienna.