TAG Immobilien AG

XETRA:TEG

Earnings Call Transcript 2021-Q2

[Operator]

Dear ladies and gentlemen, welcome to the conference call of TAG Immobilien regarding the publication of the interim report Q2 2021. At our customers' request, this conference will be recorded. [Operator Instructions] May I now hand over to Martin Thiel, who will lead you through this conference. Please go ahead.

[Martin Thiel, CFO & Member of Management Board]

Yes. Many thanks, and good morning, everybody. This is Martin from TAG. Many thanks for dialing into our Q2 2021 conference call. Yes, as always, let's jump directly into the presentation with the highlights slide on Page 4. First of all, a quick look on the operational performance on the German portfolio. I would say vacancy rates, like-for-like rental growth on a solid way vacancy slightly decreased by 10 basis points after the increase that we saw in the first quarter, which was roughly 60 basis points. So we are more or less now back on track, and we are quite confident that we can reduce this vacancy rate even more during the second half of 2021. In the total portfolio, vacancy rate remained stable at 6.1%.Like-for-like rental growth a little bit higher than in the first quarter. So 1.6% was the actual number, including and excluding vacancy reduction after 1.2% and 1.4% in the first quarter. FFO I slightly increased by EUR 300,000 quarter-on-quarter. And if you compare the first half of 2021 with the first half of 2020, the FFO I increase was around 6%.Good development of the EPRA NTA per share up by 8% on a semiannual basis after the good valuation results that we saw at 30 June 2021. This valuation result came up with a total valuation gain of around EUR 310 million. Yes, of course, the largest part of that still is attributable to the German portfolio, which is clearly, any total number is much larger with EUR 305 million, but also not a bad sign, even in the quite small Polish portfolio, and we saw a slight valuation up by around EUR 5 million. Of this EUR 305 million valuation gain in German portfolio as in the past relations, the largest part was coming from as compression. But still, we receive valuation uplifts from the operational performance. New valuation levels stand now at EUR 1,150 per square meter and a 5.5% gross yield. This should be still something where we could expect further valuation in the future.Coming to the next page, look on our operational performance in Poland. Let's say very clear, we are very happy what happens currently in Poland with our business, not only that the selling business is on a good way. Also, the ranking business has now actually started. I will come back to that a little bit later. The first tenants have moved in now. In total, we achieved results operation in Poland in the first half of 2021 of EUR 4.5 million. This is a strong increase in comparison to the previous year. This EUR 4.5 million currently is coming solely from the selling business.The builds to hold units pipeline increased sort of contractually secured pipeline stands now at 8,200 units. The build to sell contract to the secure pipeline is roughly stable with 3,700 units. So we are currently a total contractually secured pipeline. That means acquired and plots or contracted secured by land plots or projects even under construction of nearly 12,000 units. GAV at the Polish portfolio is growing now at EUR 216 million after EUR 191 million in the first quarter.Yes, just a quick comment on the COVID-19 business update. More or less, everything unchanged, or rent deferrals, instead of minor impact. We have seen -- we have discussed this in our last call, vacancy increases during the lockdown. Now this is absolutely stable again and totally then reduced in the second half of the year. And also in the Polish portfolio, we have good news.I mean here, it was, of course, also for us a little bit unclear how the unregulated markets react in such times. But sales prices and volumes in our markets have even seen a strong growth in the second quarter of 2021 and the rental markets, at least in our regions, like, for example, [ Goslar ] have been very stable.All the construction site in Poland are still running. So no delays are expected. And as I said, the first build-to-hold projects are now completed. Also very positive that we received a very nice ESG rating from Sustainalytics, and at the end of last week. We are now rated in the best category score of 9.9, and that puts us among the top 3 of all real estate companies worldwide.Let's go to Page #7. And perhaps some comments on the income statement are worth mentioning. If you look at the development of the net actual rent, we saw a slight decrease in the net actual rent quarter-on-quarter, but this is a result of ongoing sales that we signed in 2020 and is closed in 2021.So the better picture is to look at the first half of 2021 and compare this range with the first half of 2020 where we saw in total an increase in a net actual rent of 3.9%, out of which 2.3% refers to net acquisitions and 1.6%, as I said, is coming from the like-for-like rent growth.The net income from sales in the second quarter of 2021 was quite strong with EUR 4.5 million. In total, we achieved EUR 7.5 million net income from sales in the first half 2021, and this is mainly coming from our activities in Poland. So out of the 7.5% -- EUR 7.5 million, there EUR 6.7 million coming from Poland. And this EUR 6.7 million are after effects from purchase price allocation that we still have that reduced this result by EUR 1.8 million.If you compare the personnel expenses quarter-on-quarter, we see an increase by EUR 0.8 million. This is mainly coming from the effect from the settlement of the long-term incentive plan in 2018 to 2020 and the new management board compensation after the approval in AGM in May 2021. So this refers to the compensation in TAG's shares with all of the 3 Board members have received or will receive in the future.The net financial result reduced in H1 2021 in comparison to H1 2020 by nearly EUR 15 million. but this is mainly driven by the valuation of the equity option of the convertible bonds, the net financial result cash after one-offs improved by EUR 0.8 million during this time, and this net financial result is relevant for our FFO calculation.And as in the previous quarters and years, the income tax still mainly contain deferred taxes, the cash taxes in the first half of 2021 amounted to EUR 3.8 million after EUR 5.6 million in the previous year on comparable period of the previous year. And perhaps interestingly -- interesting out of this EUR 3.8 million, just EUR 0.7 million are coming from the German business. Here, we still benefit from positive tax effect that we have after repurchasing of the convertible bonds last year.On the next page, we can take a look at the EBITDA, FFO and AFFO calculation. As I said, the FFO I was slightly increased by EUR 0.3 million quarter-on-quarter. It increased by EUR 5 million, so nearly 6% year-on-year. And here, we benefited from the higher EBITDA that we achieved from the lower net financial result that I mentioned and also from lower cash taxes by EUR 3 million. The FFO development is very positive quarter-on-quarter, and it was slightly reduced by EUR 0.7 million. But if you compare the first half of 2021 with the first half of 2020, we see a quite significant increase due to the higher FFO and also to the lower CapEx.To make it clear, this CapEx number is more or less temporary lower by EUR 0.3 million, if you compare the first half of 2021 with the previous period. So we expect that we will use little bit more CapEx in the second half of the year. But I think the general message is definitely positive that we don't need to invest too much to achieve our like-for-like rental growth that we currently have.Page #9, balance sheet, perhaps just a short comment on the cash position. So the cash position is definitely strong with around EUR 270 million in the balance sheet. So that means even after the dividend payment in May 2021. For 2021, there are no urgent financing needs, everything that we want to do, especially in Poland, is for the next months, definitely already financed.Page 10 shows the EPRA NTA calculation. As I already said, an 8% uplift, if we exclude the dividend payment from this EPRA NTA calculation, the uplift was even by 12%. And just to remind you, this EPRA NTA calculation is without an impact of transaction costs. If we would do that, you see this on the footnote of this page, the EPRA NTA would increase by roughly EUR 3.44.Page 11 shows the financing structure. We are now with an LTV of 44.1%, below our LTV target of 45% or more or less at the LTV target. So this is everything as it should be. We still have further refinancing potential EUR 365 million of bank loans is used on the right side are maturing over interest terms ending in the next 2 years. Average coupons of these bank loans are still north of 2%. If we finance today bank loans for 10 years, the coupons are clearly below 1%.Let's move to Page #13, adjusted portfolio in total. The units in Germany are still at 88,300, service is more or less unchanged from the beginning of the year, as we had no acquisitions in the first half so far. In Poland, the secured pipeline, so what's really acquired, we really secured -- increased quite strongly to, as I said, nearly 12,000 units from 8,700 units at the end of the last financial year.Page 14 shows the like-for-like rental growth, 1.6%, including an excluding vacancy reduction and the composition is as usual in our company shown above this chart and it's mainly coming from rent increases for existing tenants and tenant turnover and just to a very small part, 0.2% from the modernization surcharge.As we have spent, in the first half of 2021, a little bit less CapEx, we are now at total investments on a per square meter basis, annualized at EUR 18.80. You see it is on the top right of the page, after roughly EUR 20, EUR 21 in the financial years 2019, 2020. For the full year, this number should be a little bit higher, but more or less in line to what we have invested in the previous years.Page 15 the development in vacancy rate. We are now in June at 5.8% in our residential units, so a slight reduction in comparison to the first quarter. And as I said, we're quite confident that we will achieve further reductions in our vacancy rate in the second half of 2021, as we are now hopefully in a more or less normal mode and hopefully not any lockdown in Germany on the horizon anymore.Page 17 shows a summary of the valuation results. 5.2% valuation uplift was quite strong. that was definitely much more than what we have seen in H1 2020 and also in H2 2020, where we achieved valuation uplift of around 3%. This is clearly a reflection of the market that we see out there. And what is the good news on the valuation side is, of course, not the good news on the acquisition side.So the competition is incredibly tough. And you know that we are very disciplined, I mean clearly, we have portfolios now under review in due diligence processes. But it's really extremely difficult now to talk about other acquisitions at attractive prices.5.5% is the valuation gross yield now, EUR 1,150 per square meter. So if you ask us, well, what should we expect for the second half of 2021? I mean clearly difficult to predict, and we are not giving any concrete guidance. But for us, it seems clear that this is not the end of the road. So therefore, we expect a further valuation uplift towards size [ ever ] in the second half of the year 2021.On Page #19 and following me show you the slide that you know from us regarding the Polish portfolio, we have changed some things a little bit. First of all, from now on we will only talk about really the contractually secured, that means acquired or secured projects. In the past, we have also presented planned projects. That means where we have not signed the contract, but we are perhaps looking at this project or there are more or less general cancer file for banks.As we have now, we received already significant number that we have acquired, we think it's better and simply more based on facts and hard contracts. That's how we look at it also internally to look at the contractually secured projects. So don't be confused if perhaps you missed some numbers from previous quarters. If you compare that with the previous quarters, you should always look at contractually secured projects that we have called current projects in the past.We saw a quite nice increase in our contractually secured pipeline. If you look at the build-to-hold projects, we are now above 8,200 units that compares with 5,900 units in the first quarter. The main reason for this is that we have now acquired land banks in a fourth location, which is Gdansk in the northern part of Poland. So it means that we have now all in all, 4 locations in Poland besides Gdansk that, as you know, from the past was Wroclaw, Poznan and Lodz.What we have also adjusted is the estimate for the total investment cost per square meter and also for the rents. This is then more or less an experience that we have made, not so much because of increasing construction costs, it's also the case. We see currently construction costs that have been increased by roughly 5% in comparison to the previous year, but we simply are building apartments from a little bit higher standard from what we have planned before.And therefore, we also expect higher ends in comparison to what we have achieved before. And this is also something that we have seen now these numbers in the actual projects.In total, the gross yields that we expect are unchanged, so still [ 7% to 8% ]. But please see this as an update to be more accurate and to be more closer to the now first finished projects.Page #20 shows the whole pipeline in Poland. Here the time schedule is more or less unchanged. As I said now, our fourth location in Gdansk in the northern part of Poland.On Page 21, you see the first rental units that we have in offer at the end of July, roughly 400 units are in the offer. We can take a look at the home page, vantagerent.pl to get a first impression, it's also available in English. And we are absolutely happy that these projects are not only ready but that have been within the time schedule that they have been within the budget and that we achieve the rents that we have expected. By the way, the first project with 57 units that you see on the left side of the very first is already fully rented out.I mean here, these are still small numbers. But for us, it's good to see that this first proof of concept, if you want, so really works and we are very optimistic on our renting business in Poland and everything that we've seen so far was really very positive.Page 22 shows the build-to-sell pipeline. Also here, we have a second location from the lanes that we acquired in Gdansk. Also some project stages will be dedicated for the selling business.Page 24 shows summary of the ratings, as I said, and we are very happy that we received even an upgrade from Sustainalytics. Now at the beginning of August, it puts us among the top 3% of all real estate companies worldwide. And in January, we can tell you that we are really working hard on the ratings. And it's, of course, good for us that really every rating agency sees what we do regarding the ESG activities.Yes, Finally, on Page 26, a quick look on the guidance. FFO and dividend guidance remain unchanged. If we look at H1 FFO of EUR 91.5 million and compare that with the midpoint of the guidance of EUR 180 million, it should be clear that we are absolutely on track and that is guidance, that should be not too challenging.That's it for me, as a summary of the H1 results. Thank you so far for listening. And now, of course, I'm happy to take your questions.

[Operator]

[Operator Instructions] We have the first question is from Sander Bunck. Barclays.

[Sander Bunck, Vice President of Real Estate Equity Research]

Thanks very much for that topics, I guess, I wanted to ask about. The first 1 is indeed in Poland and your pipeline. Thanks for the clarification that you already provided somewhat during the conference call, but I was just interested to get a bit more color in terms of the units that were previously included and now excluded. Kind of is there a way to get an apples-to-apples comparison compared to the last quarter? And also just more looking at your time line of the planned completions, then there looks to be a bit of a slowdown compared to before. And basically, do you expect them to ramp up as you get more contractually agreed units in there?And lastly, within that, also, it looks like the average apartment size has reduced quite dramatically from I think previously, it was between 45 to 55 square meters to now around 40 square meters. So there looks to be quite a few moving parts within the pipeline. I was just wondering if you could give a bit more -- a bit more color around that. That's the first thing I want to discuss.

[Martin Thiel, CFO & Member of Management Board]

Sander, what we have done right now is simply an update as we have now really more or less in the business. You know that the first estimates are from November 2019 when we acquired Vantage, and something changed, I would say, the change has not dramatically -- so if we talk about, for example, in apartment size of 40% compared to 45%. We simply came to the conclusion that a little bit smaller apartments are perhaps more of in the market.And so it's now, hopefully, more and more accurate, as I said, important in total, the year that we expected are not -- that have not changed. We expect even a little bit better EBITDA margin on the letting processes, that number has increased now from 70% to 75%. So if you want to the first 3 observations from our now finished projects have led us to the conclusion, okay, let's do an update here and put the numbers on a more, let's say, accurate basis.I think the time period or the time line of planned completions in both pipeline, so the ready-for-rent and the ready-for-sale business should not have changed too much. Perhaps there are slight changes. But in general, we are not aware of any construction delays. So the projects are working as expected.If you look at the build-to-sale projects, the number of units, you should be aware that we are also selling units and are handing over units. So for example, in the first half of 2021, if I remember correctly, we have already handed over 400 units roughly. So the build-to-sell project has 2 dimensions or 2 directions. The first one is a continuous reduction from handing over apartments, and the second 1 is then an increase from land [indiscernible] that we acquire.And as I said, in the build-to-hold project, we saw a quite strong increase by more than 2,000 units in a contractually secured pipeline. And there are, from quarter-to-quarter, also changes that we redefined some projects from bid to set but build to hold, but we are talking here not about large numbers. We're talking here perhaps about 200, 300 units during the quarter that may shift. So I think these numbers are stable, and hopefully, this is now clear with these explanations.

[Sander Bunck, Vice President of Real Estate Equity Research]

Okay. And just from my understanding. So previously, I think the build-to-hold pipeline was around 10,700 units that is now 8,200 units. The delta is purely units that were -- that are not yet contractually agreed. So that 10,700 unit number is -- has remained broadly the same. Is that fair to say?

[Martin Thiel, CFO & Member of Management Board]

Yes. You're absolutely right when looking at it this way. So this number, if you would continue this kind of presentation would be more at 12,000 units.

[Sander Bunck, Vice President of Real Estate Equity Research]

Sorry, how many of units?

[Martin Thiel, CFO & Member of Management Board]

It would be perhaps around 12,000 units. So what we have done is to say, well, let's stick really to what we have acquired, what we have secured. This is always a substantial number. And perhaps it's not that relevant as it has been 12 or 18 months before to give more an outlook where we want to go to. And if you want to with the 8,200 units that we have in the pipeline, we have already achieved what we wanted to have as a minimum size the 8,000 to 10,000 units that we want to build in Poland. And so we're not stopping there. But it's good to say and it's clear we need to build the apartment and we need to rent out but the kind of minimum investments that we want to do in Poland, the basis is already there.

[Sander Bunck, Vice President of Real Estate Equity Research]

Okay. Fair enough. So basically, in total, if you were to look to apples for apples and the portfolio has actually increased as opposed to reduce. Is that fair to say?

[Martin Thiel, CFO & Member of Management Board]

Yes, that's correct.

[Sander Bunck, Vice President of Real Estate Equity Research]

Okay. And just -- sorry, another slight technicality on that. I'm just trying to square the math here because the number of units has reduced, and as a result, your total investment cost has reduced accordingly, which is fine. But the midpoint average apartment size previously was around 50 square meters. It's now 40 square meters. So it would actually imply that on a per square meter basis, your costs would have increased quite dramatically. What am I missing here?

[Martin Thiel, CFO & Member of Management Board]

Well, the increase in costs and average total investment cost per square meter and the build-to-hold pipeline is roughly, if my math is correct, it is EUR 300. EUR 200 to EUR 300. And also the average rent that we expect has increased now to an average, roughly EUR 11.50, and before that, it was more towards EUR 10.50. So it's -- and as I said, it's not a reflecting of dramatically increased construction costs. It's more the decision that we are building apartments, which are of a little bit higher standards that leads then also to higher end.

[Sander Bunck, Vice President of Real Estate Equity Research]

Okay. So that cost has increased by EUR 200 to EUR 300 per square meter. Is that correct?

[Martin Thiel, CFO & Member of Management Board]

Yes. And again, it's a decision to, for example, put furnitures into this apartment as well to build the apartments of a higher standard. This is not just a construction cost, inflation topic.

[Sander Bunck, Vice President of Real Estate Equity Research]

Okay. That's clear. Great. And one second quick 1 actually is just on your ESG upgrade that you referred to. I was just interested to understand what has led to that additional upgrade in terms of what is the additional bits -- what are the additional bids that you have provided? Or what are the additional bids that the rating agencies have looked at that led to an improvement in your sustainability rating? Just a bit more color on that would actually be useful.

[Martin Thiel, CFO & Member of Management Board]

Yes. I would say this is more of a continuous improvement in -- especially in the [ EU ] and also in the [ U.S. ] I mean, we're doing things in Poland regarding new construction business. that have then also positive impact on our scores. We have also more data that we simply can provide to the rating agencies. So I would not point out any special thing that lets them to this increase. It's more or less an overall improvement to the categories.

[Operator]

Our next question is by [indiscernible] Klose, Berenberg.

[Kai Malte Klose, Analyst]

It's Kai Klose speaking. I've got a question on the adjusted EBITDA margin. And could you indicate why that decreased by 200 bps year-on-year, it's on Page 8, to 68.8% after 70.8% in H1 last year?

[Martin Thiel, CFO & Member of Management Board]

That's indeed correct. I would say the EBITDA margin in H1 2020 was above average. If I remember this correctly, we had some cost reductions, which were a little bit more seasonal like maintenance in H1 2020. So if you compare the EBITDA margin of the first half 2021 with financial year 2020, we are more or less stable and at roughly 69%. And then, of course, the next question would be where do we expect the EBITDA margin to go. We are clearly looking for improvements.We have here also seen some things like perhaps a lower vacancy reduction than expected, that have net stand -- contributed to the EBITDA margin in H1 2021 is expected. As I said, this EUR 1.3 million from the share-based payment of the management compensation weighed a little bit on the EBITDA margin.So I would not say that we saw a very strong reduction as a general trend. This is more or less in line with what we have achieved in 2020 in the full year, and you should expect further these slight improvements in the next quarters.

[Kai Malte Klose, Analyst]

And second question, if I may, on Page 21 -- sorry, 29 of the presentation. Could you give a bit more flavor and a bit more color, where do you see on a real basis, the vacancy rate to improve them in the second half. We saw that CapEx was spent in the first half, particularly in Leipzig and in Rostock, which may -- which might explain the increase in vacancy rate within Rostock. But could you see a bit more details what kind of initiatives you have taken regionally to see an improvement -- a bit of a stronger improvement in the second half?

[Martin Thiel, CFO & Member of Management Board]

Well, what we are currently seeing is especially positive development again in Salzgitter. If we look at Page 29, you see that we had even negative like-for-like vacancy reduction in Salzgitter the first half of 2021. So it was minus 0.3%. Expectancy rates have increased slightly. And now when we look into our current numbers, that's in a much better way.These are regions where we saw, during the lockdown, of course, a slowdown in tenant rotation. And this is clearly also 1 occasion where we hopefully attract other tenants or tenants from other landlords as we have, hopefully, the better apartment there.So in, let's say, the more challenging markets like, for example, Salzgitter and like Gera, we should see a good development in the second half of 2021. And the region that contributes quite significantly to the like-for-like rental growth like Berlin, which is, in our case, Berlin [indiscernible] you should also see a good performance in the second half of 2021.

[Kai Malte Klose, Analyst]

Okay. But may I ask, have you taken any special initiatives in some regions? [indiscernible] spent a lot of CapEx over the previous years, [indiscernible] has also slightly gone up in the first half. just asking, is it a kind of a, let's say, general trend? Or is it because of COVID in the first half that the former previously [indiscernible] strong reduction vacancies temporarily not continued.

[Martin Thiel, CFO & Member of Management Board]

Yes, I would say it's a mixture. So 1 part as, for example, Salzgitter best -- that's the best example for us for [indiscernible] COVID. Then we have in the Chemnitz region or had quite significant CapEx investments. So if you ask me what are the regions that are more COVID than I would say, regions like Salzgitter or was Rostock where we have a higher share of students. And if you ask me, well, what are the regions where CapEx programs are now finished or will finish, and that will lead to a continuously good like-for-like rental growth, I would mention as the 2 most important examples still Berlin and Chemnitz.

[Operator]

[Operator Instructions] The next question is by Simon Stippig of Warburg Research.

[Simon Stippig, Analyst]

Lots of questions have already been answered, especially around the pipeline. I just want to clarify 2 things, please. First 1 would be in regard to construction costs, you mentioned 5% increase or on a square meter basis, EUR 200 to EUR 300. So If you would split out this furniture and the construction costs increase per square meter, how much would be the construction cost increase? Is that possible?

[Martin Thiel, CFO & Member of Management Board]

Well, the pure construction cost inflation that would be based on the roughly 1,600 that we had previously and 5%, so something around EUR 80 to EUR 90 per square meter. And if you continue this simple calculation, perhaps on top of that, EUR 200 or EUR 300 and the outcome of putting in furniture in there and bringing our apartments to a higher standard and so on.

[Simon Stippig, Analyst]

Okay. Great. And then to clarify the second part in regards to the pipeline. So the overall increase, what you just mentioned, the 12,000 units and let's say, to 10,700 units for year '20, you reported, minus the 200 units variation. So that would be roughly 1,300 to 1,500 units, an overall increase. Is that roughly right, within the build-to-hold pipeline?

[Martin Thiel, CFO & Member of Management Board]

Yes. And the main part is coming from this acquisition in Gdansk with 1,400 units. So it's a rough calculation, it is absolutely correct.

[Simon Stippig, Analyst]

Okay. Perfect. And then maybe a last question in regards to pipeline. Do you expect to expand further in other regions within Poland? Or is it more that you -- the [indiscernible] where you focus really on those 4 locations? So how can you see the strategy going forward?

[Martin Thiel, CFO & Member of Management Board]

Yes. If we look at the larger cities in Poland and if we say, which is still the case, perhaps the yield in Warsaw, the capital city are not that attractive, and the competition is extremely high. You're more or less left with perhaps a last location or 2 locations, which is Katowice and [indiscernible].And we look at this market -- if we are really successful in acquiring there, if we find something, I mean, that needs to be seen. But then that's it, and that would absolutely fit into what we have planned and as we entered the market. So we always said, at least 4 occasions make sense. A fifth location might follow. But we should not expect that we really now spread into a lot of locations in Poland in the next year.

[Simon Stippig, Analyst]

Okay. Perfect. And then I would have a question in regard to German inorganic growth. You mentioned that you -- it's very competitive and surely, I totally understand that and it's better to stay disciplined. I totally agree on that. It's just one thing I was wondering about is, do you -- what locations are you looking at? And what size and units would that actually mean if you have something on the due diligence and portfolios you're looking at? And maybe also what yields are they -- what would they be transacted currently?

[Martin Thiel, CFO & Member of Management Board]

What would be a typical acquisition today that's unchanged to the last 3 years that the sizes of that's 500 units. These are then, in most cases, locations in East Germany, these are the cities that are not [indiscernible]. This is more something like Schwerin, Halle, sizes like that with a vacancy rate, which is nothing extreme, but perhaps between 10% and 20% and with gross yields taking into account this vacancy rate of perhaps, let's say, 6% to 6.5%, that would be something typical we look at, at the moment.

[Simon Stippig, Analyst]

Okay. Great. And then if I may, 1 last one. In regards to revaluation, I mean, that was really, really strong, first half year revaluation. I just wonder what is your view going forward? Do you think this is more for the next year, front end loaded revaluation where it might be lower in the coming years or also in H2 '21? Or do you have any view on that? It would be great to get your insight on that.

[Martin Thiel, CFO & Member of Management Board]

What I would generally say the whole market benefited really from in this regard from COVID-19 pandemic. And you know that simply a lot of investors have looked at German residential in the last year because the business remains extremely stable. So what happened in the last year is now more or less reflected in the H1 valuation.Is there anything on the horizon that this trend could get into a negative direction? That's clearly not the case. Have we seen an unusual strong market development now in the last quarter? I would say, yes. So just as a personal opinion, I would expect that we see valuation uplift also in the future but we have -- perhaps we've seen something really extraordinary now in the last quarter.

[Operator]

There are no further questions, and so I hand back to Martin Thiel.

[Martin Thiel, CFO & Member of Management Board]

Yes, many thanks from our side. Thanks for dialing in as always, if you have any questions, please feel free to contact me or our IR department. Have a good day, and bye-bye from Hamburg.

[Operator]

Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.