alstria S.à r.l. (AOX) Earnings Call Transcript & Summary

Dear, ladies and gentlemen, welcome to the conference call of alstria office REIT-AG. At our customer's request, this conference will be recorded. [Operator Instructions] May now I hand you over to Olivier Elamine, who will start today's conference. Please go ahead.

Thank you very much, operator. Good afternoon from Hamburg, where the weather is very much like the environment we are working on with a couple of ray of sun in the sky, but a lot of cloud at the horizon. We -- I'm here sitting today with Alexander Dexne, alstria's CFO, which is actually sitting more than 2 meters away from me to meet the social distancing concept. And we wanted to have the opportunity to set up that call in order to discuss the current situation of the company and more importantly, to allow you to ask question, and I'm sure that there are going to be a lot of those. Before we start, I'd like to draw your attention to the usual disclaimer about the forward-looking statement and the duty to update. And then without undue delay, I run through a presentation, which is going to be relatively brief, and most of the information has already been made public in -- on Monday through the ad hoc disclosure that we made. But just starting with a very short business overview of where we stand year-to-date and that overview is essentially looking at the situation prior to the start of the difficulties in the market. So we have let and signed lease extensions, slightly short of 50,000 square meter. Year-to-date, all the lease discussions that have started before the market came to a standstill are still in progress so we're still working on leasing. But obviously, new lease discussion has been made extremely difficult, linked to social distancing. There is limited site visits taking place right now, and also we're trying some new technique to organize virtual site visits. It's very likely that the letting market itself will slow down dramatically as a result of the general lockdown that we have in Germany. The development side, we have 10 assets, which represent slightly short of 200,000 square meter under refurbishment, 17% of those are pre-let essentially to public tenants. Our construction side are, as of today, still progressing as planned, but we do expect to have further disruption if the situation continues the way it is. But as we speak, our construction sites are still progressing as planned. On the transaction markets, it's fair to say that they are largely frozen. There is very limited, if not no transaction activity as we speak. We did not buy any property in 2020. We did sell 5 for a total consideration of EUR 82 million. Out of those 5, 4 have closed, and 1 is still expected to close around the end of April. There is no reason to believe that those transactions would not close. I mean the contracts are not stopped by what's happening right now. As a matter of fact, we did close 1 of the 4 transaction in the course of this week. Looking and moving on now to maybe the new legal situation. As you may know, there is a new law which was approved by the German parliament, which is here to probably define a certain number of relationship, contractual relationship and how they work during the next 3 months and could be extended for another 3 months by the government. And among other things, as this law is defining the relationship between landlord and tenant, the main changes to this relationship is the restriction for the landlord ability to terminate a lease due to rent arrear in the period running from April to June 30, if the nonpayment is caused by the current pandemic. In the current -- before the pandemic, you need to know that we have the ability to terminate leases as soon as we have 2 months of unpaid rent, and we were obviously making use of that ability when it was necessary. This obviously has been suspended by the law. What is also important to note is that the rent that is not paid is still due and payable, and arrear interest can also be charged in line with the rental contract. We believe the fact that the government has published this law is a substantial positive for the industry as a whole, and we look at it very positively because it actually clarify and put a framework around the discussion that we're having with tenant, it clarify that the rent are due, and it clarifies as well what our responsibility as landlord are and the fact that we cannot fire people or take them out of their premises because they're running into financial trouble as a result from the COVID-19 outbreak. So all in all, we feel that, that is helping and easing the conversation we have with tenant because it provides a very, very clear framework in which we operate and our tenant operate as well. So it's a huge positive in the discussions that we have, and it has eased the situation on our end, at least when it comes to the discussion with our tenants. When we look at the actual cash flow, it is pretty obvious, I think, right now, is that a number of our tenants are going to struggle to meet month end, and therefore, we have received a request for rent suspension. As of today, so very -- this morning, we had 115 tenants which have requested to suspend their rent, which represent around EUR 1.5 million of the monthly rental income. So that's slightly above 10% of the current rent roll. Out of those 115 tenants, there are 43 tenants which represent a total loss of income of EUR 230,000 per month, which is a relatively limited part from whom we have already waived or we are in the process of waiving the rent, which represent a rent loss for the next 3 months of 69 -- EUR 0.69 million of loss of rent impact on the alstria P&L. Those are essentially tenant which has been, in the past, punctual in paying the rent, which do not currently have rent arrears and are very small mom-and-pop's shops or restaurants which are closed for business. And I think we also wanted to help them into going through that difficult period by waiving the rent. We're still asking for service charge being paid, but we're waiving rent. The other EUR 1.3 million remain due, and we also made it clear to our tenants. So this might have an impact in terms of cash flow in a sense that the cash flow will be postponed to a later stage, but no impact on our P&L so far as the rent remain due. Obviously, this is a moving situation, and we will need to look it up and how things evolve over time. We are in the process of running our first batch of rent collection. And as of today, it seems to be working pretty much as usual. So we're not seeing any massive differences between an average month and today with the exception of what is mentioned on this slide. And I think what's also important to notice is the total amount that we have received today is still a fraction of our rental income, and it's completely manageable by the company. Obviously, if things change, we would update our data. There is clearly, and for the right reason, a focus on the liquidity of the companies. And again, here, we're showing an information that we were providing to the market on Monday. We currently have EUR 683 million of available liquidity, cash and cash equivalent on the balance sheet. And we have, in the next 2 years between '20 and '21, EUR 364 million of debt that is payable, EUR 37 million being Schuldschein loan that we need to repay in May and EUR 327 million is a capital market bond that we intend to repay around December. We have committed CapEx of around EUR 198 million, which leaves us with EUR 121 million of free cash. During that period, we expect, and this is really not a guidance of where our future revenue would be over a 2-year period of time, there is a lot of conservative assumption in there, especially with respect to how the future and when the future rent will start on the delivery. And then please don't ask me further detail on that because I will not be able to provide you with a full model behind it. But we expect to have a conservative assumption, EUR 190 million, EUR 189 million of cash flow generated from the business. And so a total about EUR 310 million over that period of time, of which, EUR 20 million would be coming from the tenants which are the most at risk and EUR 34 million is coming from small- and mid-sized company, which we feel is a 2 part, which are the small -- the biggest risk of bankruptcy and potentially losing the tenants. But this would leave us with EUR 256 million of free cash flow available for distribution between 2020 and 2021. And I'm sure there is going to be a lot of question around that, and we'll be more than happy to take them on board in the Q&A session. There is, of course, again, understandably a lot of focus on covenant and debt. And here, I think we've been working quite diligently over the years to reduce our LTV, reduce our debt exposure. So we find ourselves in a very, very comfortable position, both in terms of cash flow multiples. I think we have an 8.4x EBITDA multiple on the total amount of debt. And also on the LTV covenant that we have, we're summarizing on this slide, where we stand. And as you can see, we have a very comfortable situation, and we have no concern whatsoever when it comes to the current debt situation. Moving on to the next slide and the last slide of the presentation and touching base on the dividend. And I know there have been a lot of questions, especially with respect to what are our obligation under the German REIT law, which is slightly different, than in other jurisdictions. I think the first thing we want to highlight here is, we're taking an extremely cautious approach and proven approach when it comes to the dividend proposal. I think the German government in the law that was signed a few weeks ago has allowed company to postpone their AGM at the latest to December. And we intend to use the time as much as possible of the time available to the company to basically better understand what the consequence of the current situation are going to be, both on us and our tenants. There is obviously a case to be made that the longer the situation remains locked on, the more companies, the more of our tenants are going to be susceptive to run into liquidity problem. And I think it is reasonable today to take the time and not rush into a decision. We feel it would be both irresponsible to confirm the full dividend today, and it will also be irresponsible to basically cancel the dividend altogether simply because we don't have yet all the facts that would allow us to make a reasonable decision. So we're using the time that we have and that the new legislation is giving us to basically be able to have a better view on how the economic weather is going to be in the foreseeable future, and then we assess the dividend at the latest time possible, which will be just prior to calling the AGM probably and more likely towards the end of the year. With respect to the REIT law, we do have, not an obligation, but there is a requirement to pay 90% of the German GAAP net income, which would be around EUR 38 million or EUR 0.21 per share. If we were not to pay the dividend, we would then just need to basically make hold to the tax authorities, which would require them to pay the tax due on that dividend, which is around 30% of the amount, so shortly north of EUR 12 million. The REIT status will only be in danger and would be reviewed if we were not to pay a dividend for 3 consecutive year. But there is, here, the ability for the company if there was some kind of liquidity issues, which, again, currently there is none today, there would be the opportunity to further reduce its liability and discuss about -- with the tax authority about the 30% tax leakage that we would have here. So this is all on our side. Again, we are also getting new facts on a daily basis. But what we wanted to reemphasize before we move to the Q&A is the fact that we have been preparing the company to go through a rough time for quite a while now, and we feel very, very strongly in the position in which we are, we have the strongest balance sheet that the company had on record, with the lowest LTV possible. We have been paying back debt substantially, so reducing the LTV, not only by increasing the value of the asset, but also by reducing the total amount of debt on the company balance sheet. We have no refinancing need between now and 2023, which is 3 years down the road. And we have ample cash flows to -- free cash basically to cover for a substantial period of time, even if the company was to receive no rent whatsoever, which is not something we're currently assuming. So we feel in a pretty safe place, and we are more trying to concentrate about how the exit scenario is going to be and whether or not this is going to create potential opportunities for the company moving forward, while obviously monitoring the development of the situation pretty seriously and keep on working on the assets as much as reasonably possible, considering the circumstances. So that's it on my side, and we're looking forward for your questions.

[Operator Instructions]

Operator, can we check that we don't have any technical problem? You have people on the call?

So we receive the first question from Kai Klose from Berenberg.

Kai? We're seeming to have some kind of technical...

Okay. So I would hand over to the next questioner. It is [indiscernible] from PIG (sic) [ AIG ].

It's actually [indiscernible] from AIG. A quick question to confirm the cash balance. So you said that the cash position of EUR 683 million, and I was just curious how that number is made up, and you ended the year with EUR 298 million. I guess what has led to this increase? And maybe what costs are -- were not due in the first quarter that could reduce this kind of as we go along the year?

Actually, the balance of what you have in the year-end cash number is in the financial assets. So there was some of the money is at hand that were invested in like money market products. But in essence, the cash position, I mean, the fundamental cash position has not so much changed since the year-end because the main source of this relatively substantial cash balance was the issuance of a EUR 400 million bond in the course of last year. And the sole purpose of this bond was actually to repay the financial dues that are payable this year and early '21. And the reason -- and this is a bit of an oddity probably due to the negative Euribor environment or a negative interest rate environment. When we did run the numbers, it was actually more expensive to pay back the debt straight away than to hold the cash and it back only 12 months down the road. And this is why we're holding the cash, so to speak, in order to fulfill our financial payments. While I do appreciate, in the usual situation in a normal interest rate environment, you would just cancel the existing debt straightaway. But with a negative environment, instead of discounting the amount due, we would have to compound it, and thus, the earlier you pay it back, the more you have to pay back, which is kind of ridiculous and counterintuitive. I don't know if this makes a lot of sense what I'm saying, but this is the kind of technical underlying analysis while we're carrying this much debt -- this much cash right now, but it's solely dedicated and committed to fulfill the financial obligations that we do have coming due.

And did you have any undrawn committed lines and credit facilities in addition to this?

That is right. We had a EUR 100 million RCF, revolving credit facility, which we did grow down on and have that available in that cash balance right now.

Okay, great.

And that has a -- that was actually just renewed last year and has a 3-year maturity on it.

Okay. And I guess, I mean, the other point, you did talk about the covenants and you highlighted the LTV being quite low at the moment. I guess, in general, I wonder, on the valuation side, I mean what is your thinking around how surveyors going to look at property valuations? I guess it will be, in my mind, it's really going to be after -- at the close of the second quarter at the end of June and if those results were, I guess, real estate companies across the world will show that impact, I mean what is your thinking around that? I mean how much does maybe do lower discount rates help? What is the impact from the lower rent do you think? How are surveyors going to look through this kind of event?

I mean my view would be really, really twofold. I mean, short term, you see unemployment figures probably surging. You see -- I mean the fundamentals, clearly for the next, whatever, 12 months, don't look so thrilling. So potentially a lot of the rental growth but you could have underwritten in the past, a lot of the reversion potential is probably at question. There is also the impact, obviously, which is probably more long term. And that is, I mean, in the prevailing low interest rate environment, I think there is still going to be a substantial focus on real estate assets. So -- and you blend this with the absence of reference points, which is always very important for value, this is really the mix you need to manage for midyear valuation. But as we speak, I would clearly expect values to come southwards short term because this is just the methodology works, right? I mean it goes up in a strong like upward economic situation and in a situation like this, where there is clearly more risk in the overall outlook and economy, I mean, I would clearly expect values to come in. But so far, I mean, we don't really have a lot of transaction evidence, as Olivier said in his presentation, to underpin this and then to prove that situation.

I think just to complement what Alex just said, if you listen to our communication in the past, we have been arguing for quite a long time that there is a disconnect or there was a disconnect at least in the last valuation round between the underlying cash flow and the cash flow expectation and where capital value has gone. And it's kind of interesting that now everybody is looking at the cash flow, which might be slightly lower than they were before and then assuming that because cash flow are lower, you would assume that value are going to be substantially lower as well because over the last 2 or 3 years, again, nobody was looking so much about cash flow and the potential growth and capital value has keep on going up and up and up. So the counter argument to what Alex just said is in a very low and actually even lower interest rate environment, where people are going to be even more desperate to find yields. The value of real estate is going to remain probably as high as it is today. And so you basically have those 2 opposing factors that are at play right now, and it's very difficult to predict today where the value are going to be. What is potentially pretty much -- I think, from my perspective, pretty much evident is, it's very, very unlikely. So if you see some volatility in real estate pricing in the coming months, it's unlikely that real estate price are going to cross 50% because that would mean that yields are going up dramatically. And this is not something we are seeing right now, not even in the capital market. So there is some yield extension on the debt side, which is being emitted today by company, but investment-grade company, I mean, the yield is still at 2% on the debt side. So we don't expect that they -- so the volatility that you're going to see on the values of the asset, it's probably going to be, again, from today's perspective, very, very much contained, but we will need to get the evidence of the first transaction taking place before anything like that happened. The other thing I wanted to highlight is, we also have been prepared for that because we've been selling the weaker assets. The assets that actually has the biggest risk of being at risk from a cash flow perspective, from a weaker tenant perspective because there are more in secondary location at the outset of the city, et cetera. And we've been reshuffling the portfolio to be in stronger location and stronger position. And I also believe that the fact that we've undergone that and the 82 million we sold year-to-date was part of that exercise, is also going to help us to weather, or at least to, on a relative basis, to perform better than others.

And maybe final remark and observation on valuations. I mean last -- the December '19 valuation came out at like EUR 3,000 per square meter in terms of capital value, which, by far, was not the most aggressive you could observe in the market. We feel by having taken this rather conservative valuation approach, we're probably also going to be less under pressure to revalue, number one. And then you look at the current implied valuation, like -- I mean, the market currently values alstria at more like EUR 2,000 per square meter, which is probably substantially below anything that could be considered to be a replacement cost, not even looking at land value that is embedded in the value. So from that perspective, also we're clearly not going to be completely ignorant to what's going on in the next valuation round, but we feel like we're in the right corner of the playing field.

Okay. That's very useful. I mean if there is no other questions, I would have one more just to confirm the cash flow number that you cited for 2020 and '21, was it something like EUR 250 million that you mentioned you expect to generate?

Yes, EUR 190 million, which is basically, Olivier said that it's like a simplified -- looking at the simplified analysis, looking at the current FFO, the growing rate FFO and just multiplying this by the number of months, so 21 months, which is the remaining to fill up till the end of '21. There is obviously a lot of simplification in this, but this was just to show what our embedded kind of ongoing cash flow generation capability is and just to make the numbers square in this 2-year view we're showing to you.

And out of those EUR 189 million, there is EUR 54 million which will be generated out of the weaker part of the portfolio, which is more retail tenant than SMEs, which are more sensitive to potential bankruptcies.

Okay. So if you wanted to be more conservative than that, was it EUR 55 million (sic) [ EUR 54 million ], you could basically take out. I mean the EUR 189 million does not take out the rent some clients that you talked about in the beginning that are currently not paying. It actually -- it just assumes that you receive all the rents, right?

Absolutely. And this is why we're showing the EUR 34 million and the EUR 20 million separately just to give you the number. If you want to be even more conservative then you assume that all our tenant go bankrupt on the more weaker tenants, then you need to take out EUR 54 million out of that.

Okay. No, that's great. That's very helpful.

So this is -- I mean, just to be clear, this is really like a rundown scenario, which we don't expect is going to happen, but we just wanted to give you the numbers.

So the next question we received is from Julius Stinauer, Hauck & Aufhäuser.

I have one question on the rent deferrals. Did I understand correctly that the amount increased to EUR 1.5 million per month now?

Yes, that's correct. 115 tenants, EUR 1.5 million per month. It is -- this was an increase compared to what we produced on Monday. It is slowing down now, but we're still receiving almost on a daily basis, which we're looking at on individual basis.

So it might be sensible to even assume a slightly higher number than the EUR 1.5 million?

That's correct. But again, on the vast majority of those, it's going to be just a deferral. The part we have waived is EUR 230,000 so far. We have waived for 3 months, which is a total P&L impact of EUR 690,000.

Okay. Understood.

I would just also complement the waiver initiative we've done here. I mean we're obviously waiving, as Olivier has discussed, like more the mom-and-pop business, the small restaurants, where we believe -- I mean, in essence, they're good tenants. They have been good tenants in the past, but they just don't have the capability and capacity to -- even if we've like deferred the rents for 3 months, just to pay them back later on. This is not a -- I mean this is an act of solidarity, but not only because we also feel, economically, we're doing the right thing here because, I mean, as soon as the lockdown is going to be over, those tenants are going to be back and run their business successfully as they have been doing in the past. So we're just helping them basically to overcome those 3 months, and then they're going to be up and running again. And for us, the alternative would be to go through like a messy process of finding a new tenant, getting rid of the old one, which is just like prohibitively difficult and also really not in line with the view we wanted to take here. So we -- actually, I feel we're doing the right thing for economic and also for more solidarity reasons.

So we have, again, a question from Kai Klose from Berenberg.

I've got one question. You received so far requests [indiscernible] in existing contracts, have you already received some tenant request to suspend or to reduce rent increases according to existing contracts?

Rent -- to suspend rent increase? I'm not aware of having that. So usually, the requests we receive is just -- I mean, a letter is saying, "Dear, alstria, I'm here by informing you that I cannot pay my rent for the next 2 months or 3 months." But we haven't received any -- I mean, anything specific. What we're doing, we're obviously going back to the tenants and trying to better understand the situation. What I think is also important to mention is, apart from the mom-and-pop, there are obviously tenants which are just trying to abuse the situation. I mean there are tenants, which I'm not going to quote by name, but which are a listed company, which are on one hand issue notes to the market saying, we're in a very strong position, our business is booming, and then the same day, you receive a notice that they can't pay the rent. And on those guys, we're clearly going to charge them the full 8% penalty rent. So economically, it's also not too bad, but we're just lending the money at 8%, but we don't have yet very specific discussions. What we clearly intend to do is, for those tenants who are asking for waiver and are stronger tenants, there might be something we ask for them in exchange, which can be a lease extension or an amendment to the lease on something we expect from them. So I think there are going to be a discussion at the end of the day with the tenants that are running on cash flow. And we are really trying to look at -- to take a case-by-case approach and try to figure out. But specifically to your question, we didn't have any request from tenant to waive rent increase -- potential rent increase, which would be linked to CPI essentially in our contracts.

So the next question we received is from Sunny Lee from Partners Group.

I have 2 questions. So you clearly mentioned you have waivers and also you keep deferrals. Is it only up to your discretion? Or would the government guide you -- give you any instruction regarding who gets waivers and who gets deferrals? And the second question is on GFC you experienced through the crisis last time. What was it like? And then if you compare your tenant base now compared to GFC, do you think -- you expect anything different this time?

So the government, as you know, has very much clarify the playing field. What the government says is, basically, as a tenant, you need to pay the rent unless you are in dire situation following the lockdown. And even in that case, if you stop paying your rent, then the rent is not waived, but it still remains due, and you have up to 30th of June 2022 to cover your debt towards the landlord. And what it says as well is, your debt can carry an interest, which is currently at 8%, which is the legal interest on rent. So basically, I mean, I don't know how to phrase it otherwise, but the landlord -- the government is very, very friendly to the landlord in its proposal. The waiver we're doing is a voluntary waiver. So it's not something the government has directed us to do. And as Alex said, it's not only because we are good ethical people and we want to help, but it's also because that's a good business decision to do. Those are tenants who have been performing. The lack of performance today is clearly linked to the situation, and we expect them to perform again in the future. It would be more expensive for the company to lose them and then have a new tenant rather than to waive the rent for 3 months. So this is really a company decision, which is driven not only by solidarity, but also because we think that's the right economic move to make. But the government is clearly -- and very clearly says, rent is due, it might not be payable, and the only thing that you're sure as a tenant will not happen, if you don't pay specifically because of the lockdown linked to the virus, then the landlord cannot terminate your rent. More importantly, what the government said as well is, the burden of proof is on the tenants. So the tenant need to prove if we end up in court that they had -- they could not pay the rent because of the virus. It cannot be for any other reason. So I think that, I hope, clarifies the point.

Coming to the difference between now and global financial crisis, I think the main difference is really -- I look at alstria during global financial crisis, we didn't have a single tenant defaulting on the rent. The global financial crisis, as in the name, was really a banking and financing crisis where then there were no liquidity, no financing liquidity available, which led to the values crashing, and then it was more like an accounting crisis because LTVs were -- LTV covenants were broken and banks were entitled to, I mean, basically, get on your back based on what was happening to property valuations. It was, at least for us, we are never a liquidity cash flow crisis or cash flow-driven difficult situation. Now this one is going to be and is already substantially different because due to the lockdown, there's a group of businesses that we have tried to identify and then separate here. We just don't have any revenues anymore. And the longer this takes, the more this trickles up the value chain, if you like, from the small business, to the midsized business, to the even more institutionalized business. So this is going to be substantially different because it's much more entrenched in what is happening on the real business side, I feel. And then it's going to trickle down also into the financial sector via the business sector because obviously, at some stage, also here, covenant is going to be influenced, and there's going to be an impact on the ability of certain borrowers to pay their financial dues. And you can already read this at least in a German paper that there is like private borrowers that are defaulting on their loans because they -- I mean, they just have nothing to put in front of it. So I mean this is a time where cash is going to be king, liquidity is going to be king and a strong balance sheet to put against the challenges that might lay ahead of us. And as we said, I mean, you can always be stronger, but what we feel we've done a lot of work in terms of strengthening the balance sheet and putting liquidity aside, not having refinancing exposure for the next 3 years that the company is in a great position to weather the storm.

The next question we received is from Georg Kanders, Bankhaus Lampe.

Regarding the tenants that are directly affected, I wonder why not all of them have tried to waive the rent? Is it because of the possible interest charges? Or are they partly also very strong tenants?

I mean some of them might be -- so I mean, first of all, I think the way we have sliced and diced the portfolio might not be 100% accurate. So there might be within that group tenant which are strong than we think or believe. It might as well be that some tenants are just not going to pay or just didn't inform us yet. Sometimes, they might just think, I'm not going to bother into sending a letter, I'm just not going to pay, which is another reason why you have that. And some others, which are not necessarily included here, have already reached out and have already proposed alternative ways. So some tenant have reached out and said, "Look, I can only pay 50% of the rent this month and next month, and then I would like to discuss kind of a repayment plan over the next 2 years." And then we're having those discussions. So I think, again, it's -- I mean, there is no one-size-fitted-all option here, unfortunately, and we're really dealing on a tenant-per-tenant basis on those small guys as much as we can. So -- but the fraction that have not reached out, at least, on the tenant directly affected is very, very minor right now. So what you have in there, for instance, is private individual who -- renting a parking for us, a single parking. And those guys will just assume that -- I mean, if they stop paying, they're just not the pay, but they're not going to reach out.

The next question we received is from Monika Leykam from Immobilien Zeitung.

Yes. Just a short one to Olivier. You mentioned in the beginning that the transactions market is pretty much frozen. And in the same time, you stated that you could sell your properties like you planned, and you had a closing this week, and you will have another closing next week. So this seems to me like a bit of a contradiction, right?

Yes and no. So what I tried to mention, I was probably unclear in my phrasing initially. The -- so all the transactions that have been signed, it takes usually 1 or 2 months before they close. So the SPA has been signed with a notary, and now we're just running through the preemptive measures from the cities that need to be waived, et cetera, and those deals are still closing. So everything that was signed before the start of the lockdown, and those are the ones we're mentioning. One of them closed this week. We have another one which we expect to get the waiver from the preventive right during the month of April as we close at the end of April. What have frozen is, I mean, nobody is doing or very little people are doing due diligence on site today or site visits to buy and sell assets. We are not receiving information around them about people putting assets on the market right now. So the volume of transaction that is starting today is very close to 0. I wouldn't say it's 0, but it's very, very close to 0. And we expect that the transaction market is going to remain subdue, I mean, simply because it's practically very, very difficult to just underwrite an asset, not necessarily only from a financial perspective, but just to organize the size of it and due diligence and everything. It is very, very difficult. So everything which has started before the lockdown is still working and continuing. Everything which we need to start now from scratch is on ice.

We have currently no further questions on the line. [Operator Instructions]

Well, if there is no further questions, I would like to thank you all for attending this call. We will obviously keep on updating you at the latest in May, when we will publish our Q1 number, which are going to be number undisturbed by what happened, but we will make sure that we will also give you an overview of what happened between now and then. And obviously, if anything material change in the meantime, we would keep the market informed. We are still all available, Alex, Ralf and myself, if you have any follow-up questions, please do not hesitate to reach out. We're all at home and in front of our computer anyway. So we will be available to speak either on the phone or via e-mail. Thank you very much for your attention and stay safe, and looking forward to speak to you again in May.

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