Adler Group S.A. (ADJ) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the Adler Group Investor Call. I am Marya the call's operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Gundolf Moritz, Head of Financial Communications. Please go ahead, sir.

Yes. Thank you, Mara, and good afternoon, everyone, and thank you for joining us here today for the Adler Group Full Year Results 2023 Analyst and Investor Conference Call. As Mara said, my name is Gundolf Moritz, and I'm handing Financial and Corporate Communications for Adler Group. Along with me, we have Thierry Beaudemoulin, CEO; and Thomas Echelmeyer, CFO, who will now guide us through today's presentation. This presentation will be followed by a Q&A session in which management will answer any questions you may have for investors and analysts. Please note that this call will be recorded and made available on the company's website, where you can also download today's presentation. With that, I would like to hand over now to Thierry. Thierry, please go ahead.

Thank you, Gundolf. I also welcome everyone who has joined us here today. Before we start, I would like to highlight that part of our agreement and commitment to all of our stakeholders, we are working on the issuance of audited consolidated financial statements and annual account for the financial year '22 and '23 by end of September 2024. Therefore, please note that the numbers presented today concern unaudited financial statement for 2024. Now let's update on our restructuring plan. Over the past 2 years, our industry has faced insolvency situation, valuation pressure, projects stand still and restricted financing coupled with a pressured transaction market. To address this challenge, we aim to stabilize our financial structure and improve operation. Our initial reserving strategy focused on selling assets to repay debt. Given the current market challenge that endure assets sell at favor price, we are proactively adapting our approach. Our revised strategy is based on 2 pillars: first, a business plan to efficiently restructure challenging assets; and secondly, a comprehensive financial restructuring to ensure long-term stability. This would improve the company cash position, stabilize its debt structure by postponement of maturity beyond '26, '27 and provide a sufficient equity position until maturity of Adler Group pro launched debt in order to provide a solid foundation for the group going concern. Therefore, we, as a management, have entered into constructive discussions with our creditor to facilitate negotiation about the refined restructuring plan. As announced this morning through adopt notification, we have reached a nonbinding agreement on the restructuring with our bondholders. We are aiming for a lockup agreement to be signed in due court. Based on the progress so far and considering alternative option available, we take the view that a solution can be implemented until end of September 2024. It would create the conditions necessary for a going concern of the group. We will provide you further updates on this topic as we progress during the course of 2024. Let's continue with a brief update on our strategy, Page 6. We have delivered good progress across all 5 of Adler Group strategic pillar, even though adverse market condition in the German real estate market are lasting longer than expected. In this environment, I'm convinced it is fair to say that we performed well by staying aligned to our strategic pillar and objectives. Let us take a brief look at each of the pillars. First, the portfolio strategy. We are progressing in asset and development project disposal yet at a slower pace given the prolonged period of difficult market conditions. We are very proud that we have closed the sale of Acosta Tanello locating in Berlin, following the recognizable achievement of the sales of 700 unit Berlin-based Vasta rental portfolio, which was already reported in our Q3 '23 result. We have also signed an agreement for the disposal of one project while 3 additional projects are in exclusivity. It show our focused capability to continue disposing of assets and generating liquidity -- we continue to execute orderly disposal of selected portfolio and development projects in the short and medium term and follow the path of our expected transition to a Berlin centric portfolio with only limited development exposure while further deleveraging our business. Second, Asset Management. We have largely fulfilled our committed CapEx obligation on our forward sell and Condominiu development project. Other sizable CapEx commitment has been put on all completely in line with that we previously communicated. Obviously, it goes without saying we will continue Matlosand relating CapEx whenever necessary in order to maintain the value of our yielding asset. Third, financing strategy. In '23, we secured new financing in a very challenging financial market environment. We have successfully addressed all our financial obligations due in '23 while ensuring required liquidity for the group. At the moment, we have also initiated discussions with our bank in order to prolong the 2024 maturity, which are in advanced stage. The prolongation are expected to be agreed during H1 2024. Moreover, a nonbinding agreement in principle on the restructuring with bond order has been negotiated, we expect a lockup agreement to be signed and announced in deport. Fourth, corporate structure, in line with the announced simplification of our corporate structure, to squeeze out process and delisting of Adler Real Estate AG has been completed in October. As a result, we have continued its external reporting and legally, the company has been transformed into MBS. Furthermore, the squeeze out process of conscious real estate at AG has been initiated. The sales process for our stake in BCP is currently ongoing, and we are in the process of identifying the right buyer. We are confident that we will make significant progress in this regard by the end of this year. Fifth, corporate governance. In the Q3 '23 result presentation, we mentioned the appointment of Avega revision as auditor of the stand-alone and consolidated financial statement for the year '22 '23 for Adler Group to be published by end of September 2024. We are happy to share with you that all auditors are diligently and completely engaged in finalizing the audited financial statement for '22 and '23 in due time. Another recent key event was a change in the chairmanship of Board of Directors. On 9th February '24, Stefan Kirsten, who chaired Adler Group for 2 years and stabilized the company during a difficult phase resigned due to health reasons. Stefan Brendgen, who was already an active member of the Board, took over the role of Chairman with immediate effect to continue moving the group forward firmly in the right direction. At the forthcoming AGM, Adler Group plans to appoint 2 new members to the Board of Directors, one successor for Stefan Kirsten and one for Thomas Zinnocker, who will then leave as planned. Overall, a smooth transition and chairmanship and clear progress with the auditor exhibit. Our strong focus on maintaining elevated standard of corporate governance within the industry in current circumstances. We will keep you up to date on any relevant development. Let's move on Page 8. We are in particular proud that our residential rental portfolio continued to show strong operational performance in the fourth quarter of '23. We achieved a like-for-like rental growth of 5.1%, which was driven mainly by indexation and to a lesser extent by further vacancy reduction. We benefit from the strongly increasing demand in the market, the good quality of our assets and our strong presence in Berlin. This translates into a very low vacancy of only 1.1% at the end of Q4 '23. -- further down from 1.6% in Q3 '23 and 1.3% in December '22. The average range rose to EUR 7.6 per square meter per month at the end of December '23, a slight increase versus the previous year. This increment was achieved despite the sizable disposal of the Vacasa portfolio in Berlin with 700 new build. For the full year '23, we saw a negative valuation adjustment of minus 12.8% in our yielding portfolio. This was driven by a devaluation of 8.4% in the first half of '23 and a devaluation of 4.8% in the second half of the year. In our development portfolio, we saw a negative valuation adjustment of minus 6.3% for the full year '22. This was driven by a devaluation of 12.8% in the first half and a devaluation of 12% in the second half of the year. This shows that negative adjustment are slowing down in H2 '23. Moving on to financial performance. I'm glad that we were able to achieve our NIR guidance for the full year '23, which was also confidently communicated in the Q3 investor our NRI stood at EUR 210 million. The decline compared for full year '22 was mainly driven by the disposal of the Eastern portfolio to Valero Care, the Waypoint portfolio, the Vasta portfolio and some of the BCP portfolio. Note that BCP contributed to the group net rental income, even though it's accounting under asset and liability held for sale within the balance sheet. However, that decrease was partially compensated by like-for-like rental growth of 5.1% realized on the remaining assets. FFO 1 from rental activity remained negative at minus EUR 43 million compared to EUR 87 million positive last year. This corresponds to FFO 1 per share of minus EUR 0.30 versus EUR 0.74 in '22. This decline is mainly attributed to the increase of interest expenses due to our restructuring efforts. In this context, it must be noted that the FFO 1 position include EUR 100 million of peak interest in full year '23. Further, EPRA NTA stood at EUR 529 million or EUR 3.4 per share at the end of '23 compared to EUR 2.4 billion or EUR 20.7 per share at the end of '22. This movement was mainly driven by the higher noncash interest expenses resulting from the new money fund, the amendment of the Alloga bond room, which results in a higher peak interest cost as well as negative revaluation of our portfolio. Compared to Q3 '23, April LTV increased with 8.5 percentage points to 96.6% mainly due to the negative revaluation of our asset and significantly higher interest expenses. We will throw more detail later in this presentation. The weighted average cost of debt was 6.3% at the end of '23, 60 basis points higher compared to the third quarter. This increase was driven by the placement of the 1.5 lean refinancing note with a peak interest of 21% in October. We had EUR 377 million cash on our balance sheet, excluding cash held at BCP at the end of the financial year '23. We will do a dive into the development of our cash position later in this presentation. Moving to disposal and development. The volume of disposed GOV during '23 was amount roughly to EUR 533 million. We made a repayment of EUR 270 million of associated lease debt. Further worth mentioning is the progress we made in the completion of our forward sell and condominium development project, such as the completion of clinician and Patient sale in Berlin and the realization of the associated milestone payment. In addition to that, the sale of a Berlin-based development project, Vastaancellor, was signing in December '23 and closed in the first quarter of '24, thereby generated double-digit million net proceeds for the. Moreover, the open bar project which was signed in H1 '23 is expected to close in H2 2024 Additionally, the disposal of the Life 4 leading 44 Colon apart 44 and Grand Central Dusseldorf projects are currently under exclusively. Out of the 3 exclusivity, we understood from the city of Life that the acquisition of the 44 Living project will be signed tomorrow on the 26th of April. Despite the sale of the mentioned asset, it's fair to say that against the backdrop of a substantially more difficult market environment, progress of the disposal is not advanced as fast as we would like it to be. Let's proceed to portfolio and operational performance on Page 10. As in prior presentation, assets owned by our BCP subsidiary are not included in our portfolio PPL as we aim at selling our staking -- as of December '23, BCP owned 9,300 rental unit with a portfolio book value of more than EUR 900 million. Its portfolio has a large exposure to NRW and to city like Lapic, Braman, Till and GAV. In full year '23, the average rent for BCP amounted to EUR 7.2 per square meter, while the vacancies stood at 2.6%. For more detail on the BCP portfolio, please refer to BCP website where you find both the '23 annual report and results presentation. As communicated during the Q3 investor call with a disposal of 700 units of the Vaasa portfolio among Gorder, our residential portfolio comper of 25,000 rental unit, of which 18,000 units are located in body. The value of our yielding portfolio has decreased by EUR 200 million from EUR 4.4 billion in September '23 to EUR 4.2 billion in December '23 on the back of negative revaluation, translating it into an average fair value of EUR 2,472 per square meter. 86% of the GAV in our portfolio, EUR 3.6 billion in absolute figure related to our assets in Berlin, hence asserting our position of buoyant focused building asset portfolio. Let's move on the next Page 11. In full year '23, we experienced a like-for-like value adjustment of minus 12.8%. This result for our semiannual external portfolio appraisal with a revaluation result of minus 8.4% as per June '23 and a revaluation result of minus 4.8% as per December '23 on a like-for-like basis. The value of our yielding portfolio has been under more pressure compared to asset in other locations. This results in a like-for-like devaluation of 13.4% for the Berlin portfolio compared to 8.9% devaluation for the remaining of the year for the full year '23. Additionally, this mathematically also led to further yield expansion for both our Berlin based portfolio and the remainder of the portfolio. The growth a city basis point on the top of 2.8% in the last year is visible, leading to a rental yield of 3.4% of the Berlin-based portfolio at the end of '23. Likewise, rental yield for the remainder of the portfolio has increased by 0.6 percentage points, reaching 5.5% in full year '23 compared to 4.9% at the end of '22. Please join me on Page 12 to discuss our winter growth in more detail. We are happy to report that the anticipated catch-up in rental growth was realized towards the end of Q4 '23. We achieved a like-for-like rental growth of 5.1% in December '23 compared to 1.5% last year. This is a remarkable year-on-year increase of 3.6 percentage points, which exceeds the majority of our peers in the German residential sector. The 4 major factors driving our rental growth in '23 include: First, there was a 1.5% decline to new vacancy relating to units that were rented a year ago but that are currently vacant. Second, a 1.8% increase, thanks to vacancy reduction compared to the last year. Third, on the back of relating at market rent, we achieved another 0.5% rent hike. And finally, clear being the biggest driver, a 4.2% increase because of indexation of part of our existing contracts. On a per euro basis, our average rent marginally increased to EUR 7.6 per square meter per month at the end of Q4 '23. Considering the disposal of Ashua portfolio with units rented at market price of around EUR 20, it's great to see that the rental growth on the remaining albeit substantially bigger part of the portfolio has kept our average rent similar to Euro. Furthermore, on a like-for-like basis, we have realized an increase of EUR 0.35 per square meter adjust for recent disposal. Besides, please note that our operational vacancy rate has also dropped to 1.1% in December '23 versus 1.3% last year, a record low level for Adler, a clear testament to the ongoing struggles frontage on the ALD market, especially in markets like Berlin. Now I would like to hand it over to Thomas, who will update you on our financial performance on Page 14, please.

And also a warm welcome from my side. At the end of the fourth quarter of 2023, we had a portfolio of yielding assets with a GAV of approx EUR 4.2 billion and development projects with a GAV of EUR 1.5 billion, adding up to a total GAV of EUR 5.7 billion. These numbers do not include the portfolio of BCP, which is considered as assets and liabilities held for sale as we anticipate the sale of the 63% stake in BCP, held by our subsidiary, Adler Real Estate. Overall, GAV has been mainly impacted by the semiannual negative valuation adjustment of both yielding assets and development projects by approx EUR 300 million due to both the prevailing high interest rates in H2 2023 and weak transaction markets. In like-for-like terms compared to Q3 2023, the valuation adjustment of yielding portfolio was minus 4.8%, and the devaluation of development portfolio was 4%. There were other small impacts from disposals of yielding assets, disposal of development projects and the reclassification of [indiscernible] from a development project to a yielding assets after the completion of the construction work. Now let's have a look at EPRA LTV on the next Page 15. The EPRA LTV of the group increased to 97.6% in December 2023 compared to 89.1% in September 2023. This increment mainly includes: first, 5.8% points due to semiannual negative valuation adjustment of the entire yielding assets and development assets portfolio, including assets owned by BCP. Second, 1.4% points due to paid and accrued interest expenses for Q4 2023. Third, 0.5% points because of EUR 30 million development CapEx mainly associated with forward sales and condominium projects. Then EUR 80 million cash out in advisory fees, partly relating to the ongoing restructuring measures contributing 0.3% points and additional 0.3% points from tax payments amounted to EUR 17 million. And finally, 0.2% points due to disposal activities in Q4 2023, including the sale of the Manheim #1 development project and Humportfolio on BCP level. Please allow me to remind you that EPRA LTV deviates from the covenant LTV defined in our bonds. This covenant has been temporarily lifted and will be tested for the first time on 31 of December 2024. With this, let us move to Page 16. Adler [indiscernible] secured new financing in a very challenging market environment. Moreover, all maturities due in 2023 were addressed following the repayment of Adler Group's convertible, the promissory notes and the loan on [indiscernible] As communicated in our Q3 results, Adler Group has placed EUR 191 million of new payment in kind, senior secured 1.5 lean notes in September 2023 in order to refinance the EUR 165 million convertible bond and a promissory note or as it's called in German, through China, which both were set to mature in November. In Q4, the company repaid both VillemuChina or SSDs of EUR 114 million and BenataGarten SSDs of EUR 50.5 million, aggregating to EUR 164.5 million project debt. Additionally, BCP repaid EUR 8 million of bank debt following the disposal of a portfolio in Ham, North wine with failure in December 2023. Next to that, in February this year, the company repaid the remaining outstanding amount of Adler 2017 to 2024 bond in the amount of EUR 3 million at maturity. Further maturities in 2024 consists almost entirely of asset-linked secured bank financing. We are confident to address these maturities by means of prolongation. Discussions with the respective lending banks are currently in advanced stages, and we expect to have agreements to be in place in the course of H1 2024 and are subject to the refined restructuring plan. As Thierry mentioned earlier, we have agreed on a nonbinding agreement in principle on a restructuring with Bon tollers. We expect the lockup agreement to be signed and announced in due course. Let's continue on Page 17 to discuss the debt KPI. Our nominal interest bearing debt position has improved to EUR 6.4 billion through a net reduction of slightly more than EUR 100 million in Q4 compared to Q3. The lower gross debt position mainly results from the repayment of the project-related financing as stated on the previous slide. When it comes to the cost of debt, the weighted average cost of debt has slightly increased to 6.3% compared to 5.7% in Q3 2023. On the back of the issue of the EUR 191 million senior secured notes with an elevated 21% pick interest. Our total debt position has been fixed and hedged with an average maturity of 2.7 years, not taking into account the envisaged prolongation of maturities as part of the refined restructuring trend work we are working on. The detailed maturity schedule is shown on the next page. Looking ahead to the 2024 maturities. As already stated, the majority of the maturities consists of asset-linked secured bank debt and are envisaged to be prolonged. We are already in advanced negotiations with banks for the prolongation of these loans. In short, we do not expect any major challenges in 2024. As explained earlier, Adler Group is currently undertaking proactive revisions of its restructuring framework with a particular focus on stabilizing the debt structure by postponement of maturities beyond 2026, 2027. A nonbinding agreement in principle on a restructuring with [indiscernible] has been negotiated. We will provide you further updates soon as we progress on this topic. Let's turn to cash on the next Page 19. At the end of Q4, our cash position stood at EUR 377 million, which is EUR 55 million less than the EUR 432 million we held at the end of Q3. The increased restricted cash position of EUR 105 million at the end of December 2023 was temporary as a large proportion of it became available in January 2024. Please let me remind you that the EUR 377 million excludes EUR 42.5 million of cash held at BCP level, which is classified as assets and liabilities held for sale. There have been 4 major factors impacting the cash position during the fourth quarter of 2023. First, a cash inflow of EUR 70 million from the sale of development project Manam #1 and condominium sales. Second, a positive inflow of EUR 189 million following the successful placement of EUR 191 million secured notes as explained earlier. Thirdly, we repaid the Adler Group convertible bond, Adler Finance SSDs, Sevillia SSPs and Benatar SSDs. This contributed to a cash outflow of EUR 280 million. Finally, CapEx related to the ongoing development projects at the Consus level decreased the cash position by EUR 30 million. The remaining net cash inflow of EUR 49 million was related to operating income, release of web cash, a reduction in financial receivables and smaller items grouped under other. Additionally, the cash outflow of EUR 51 million mainly relates to extraordinary advisory fees, tax and amortization and interest. Thierry, now back to you.

Thank you, Thomas. We would like to end this presentation with some concluded remarks and summarize the most important milestone in addition to our guidance of our net rental income for 2023. Against the backdrop of a challenging market environment, we delivered a strong operational performance with 5.1% like-for-like rental growth compared to the previous year and a low operational vacancy of 11%. We also have a stable liquidity position with EUR 377 million cash on our balance sheet at the end of '23. Moreover, we successfully disposed the 700 rental unit Berlin based Vasta portfolio, fully in line with our asset strategy, which has been among the largest and the most preliminary real estate transaction in Europe in '23, proving our focused capability in disposing assets. Following certain disposals from our yielding asset portfolio in '23, we expect to generate net rental income in the range of EUR 200 million to EUR 210 million in '24. Additionally, Avega revision has been appointed as the auditor of the stand-alone and consolidated financial statement for the year '22 and '23, which would leave us well positioned to be able to publish audited financial statements for the world group by the end of September '24. Finally, as I explained above and to reiterate, as we embark on the year '24, our overarching goal is to further stabilize. We have tefconsiderable step to reinforce the group capacity by proactively revising the restructuring framework in order to provide a solid foundation for the group going concern. Therefore, we, the management have entered into a constructive discussion with our creditor to facilitate negotiation about the refined restructuring plan. Based on progress so far, we are confident that this constructive discussion to facilitate negotiation about the refined construction plan can be implemented until the end of 24 September 2024 fareby creating the conditions necessary for a going concern of the group. The nonbinding agreement in principle on the restructuring with bondholder has been achieved, we will keep you informed on this topic. With that, we would like to conclude the presentation and open the floor for any questions you may have. Thank you all for your attention. Gundolf. I hand over to you for the Q&A.

Yes. Thank you, Thierry, and I'll hand over to Mara proceed with the Q&A.

We will now begin the question-and-answer session. [Operator Instructions] The first question is from Felix Wolfgang from Sarria.

Yes. Thank you very much for reporting today, and congratulations for getting so far. -- it seems your conversations with your bond hold affinity are progressing faster than we thought Yes, I just have 3 questions, please. First of all, is there still a however, latent risk of shareholder action payback from 2019 or so? And what would -- if there still is a risk and what steps would that reduce I don't know to what extent maybe audit financials would play a role in that direction or how you see that going forward if it's indeed still an issue. Then the second question was you're saying the restructuring would leave you with more cash. Are you looking to hold more cash on your balance sheet? Are you looking to perhaps resume some of your developments? Or how should I interpret that? And what kind of -- some are you perhaps ideally looking for without telling us too much what it says on the term sheet now? And third, I just want to ask if there's any however distant link between, say, your coordinating bondholders and any of the purchases of these assets that you've been selling and are still looking to sell. Obviously, we've seen the city of Light interested in your Fafalproject. But -- and here and there are other cities, et cetera, are buying. But I just meant to exclude that there isn't too short a circuit between funds managed by your main bondholders.

So on the first question about shareholder litigation. So we are not aware of any shareholder litigation. So I can't comment more on this topic. In order -- in our, let's say, revised restructuring plan, so we have just communicated our ADOG. And of course, we will give you a detailed update once the local agreement is signed and then we can have a follow-up on that. But in general, you see the level of cash of the company. And of course, our aim is to continue to improve our cash position with active management of debt and active management of our asset sale on that. In regard to asset sales, of course, we are in a challenging market. with limited buyers. So we are actively pursuing to sell our development portfolio and our yielding portfolio either through, let's say, open process. So of course, the city could be interesting of some of our assets and Lipik,I think it's a good example of a win-win situation for a project, which we don't want to develop and the city wants to move forward. We are exploring if we can work with other cities. After that, of course, any stakeholder could be interesting in other of our assets. And then we are running an open market process to make sure that we address all the concern of that. But of course, this is something which we can communicate once the transaction is completed.

Mara, I understand that we do have received questions via e-mail. And I do have here 2 questions from [indiscernible] from Morgan Stanley. And the first probably goes to Thierry, can you please comment on what you are seeing with regard to the disposal market? Also, can you give us more detail on the BCP sales? And the second question, I will read probably for Thomas, what will be the net cash proceeds from the EUR 530 million assets sold after repayment of debt and all costs like taxes.

So on market, 23% was historically low market with less than EUR 6 billion transaction compared to an average of more than EUR 20 billion over the last 10 years. So very few transactions. First quarter of 24% is also very low, a bit more than EUR 1 billion. We expect market to pick up in the second quarter. So I guess the level of activity in second quarter will be higher than the first quarter, which by actively at the moment, opportunistic buyer, which has a value-added strategy. So -- and then you have core buyers like the city like some long-term investors who take the opportunity of difficult market to pick up the best assets. So in my view, a key driver for acceleration, 2 factors. So first, a stop of the value decrease because as long as the value decrease, nobody wants to buy at the wrong price. So we are still expecting value decrease in the second part of the year. So this is one factor which endure actor to transact. And second factor is, of course, the level of the interest rate because if you compare the yield of the residential company and the interest rate, you have negative leverage. So I think this is what we see in the market stabilization in '24 and picking up '25 '26.And of course, we are ready to accelerate in case the market is accelerating. So BCP, we have a stake in BCP. It's a nonstrategic investment. This is not an integrated company. So that's why we have mandated an investment bank for that. So they are currently in the process of marketing that. So we can't give guidance on where we are, but we expect to be able to close that before the end of 2024. And of course, as far as we are more advanced in the process, we will give you additional color on that. And I think the next question...

Was with respect to the sales, if I get it right, we realized in 2023. So we have here the sales prices. The gross proceeds were EUR 530 million, and there were associated debt into this of EUR 270 million, so ends up to the net proceeds of EUR 260 million.

Okay. Mara, would you take over... Please?

The next question is from Emmanuel Nadi from Barclays.

Very quick question. Have you also entertained conversations with, for example, the city of Berlin, as we seen the news in the past few days. And then another question is, and apologies if the answer is in the material, but importantly, I'm on the road, and I couldn't have it in front of my eyes. Is there an order of magnitude for the transaction that you expect to sign with the city behind the superior of live tomorrow?

So as I mentioned, our strategy is to reduce our development exposure on one end and also to reduce our debt. So of course, in the current market, we are discussing with all potential buyers, which, of course, includes the city of Berlin, but I think at this stage, I can't give more comment on that. Second point on City [indiscernible], so we will communicate to tomorrow the exact amount, so then you will get that -- thank you.

So we do have received 2 further questions via e-mail. One is from Hugo Squire from Schroders. When will detail of the proposed restructuring we made available to bondholders outside of vehicle. I think we have answered it already, but Thierry?

Yes. I think we just adopt the stage where we are in our constructive discussion. So once we have reached a lockup agreement, we will give more color on that.

And another question from Nick from [indiscernible]. Do you think your development assets are now marked down to book values where you can realistically sell most of them over the next 1 to 2 years.

So globally, as I mentioned, where we are in the market, we see a deceleration of the value decrease compared the first part of '23 was worse than the next part of '23. We still expect valuation decrease for both yielding asset and development in the first part of '24. And after we expect stabilization and further. Of course, in a challenging market where you have less buyer, you have also more interest from investors for existing assets rather than development. Nevertheless, we believe that as residential is a key investment that Germany need residential new build, we are also able to attract interest in our development project because this is a unique source of pipeline to build new residential. So I think these 2 factors will be a good foundation for us to continue to sell our development. So we will show our project in Leipzig. We have sold a plot of land in Berlin for recently. We have sold another joint venture also in Berlin, and we sold also a project in Mini. So I think we are progressing at a lower price than we expect, but we are progressing on that, and we expect to do more in '24 in this regard.

[Operator Instructions] There are no more questions from the phone. I would now like to turn the conference back over to Thierry Beaudemoulin for any closing remarks.

So thank you for attending our full year results. So as you have seen, we have in a challenging environment, deliver good operational performance, continue to progress on sales, streamline the company and anticipating to improve our restructuring plan. So we will come back to you in the coming weeks to update you on this life matters. So thank you for your attention, and I wish you good afternoon.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.