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

Hello, and welcome to the results Q4 full year 2023 call. [Operator Instructions] . Please note this call is being recorded. Today, I'm pleased to present Olivier Elamine, CEO. Please begin your meeting.

Thank you very much, and welcome, everybody, from cloudy Hamburg this afternoon. My name is Olivier Elamine. I'm the CEO of alstria, and I'm here today with Ralf Dibbern, which is heading our Investor Relations department. To introduce you to the full year 2023 results of the company, before we move to the agenda, a short look at the disclaimer and the forward-looking statement and the duty to update. And without any further delay, moving on into the presentation itself. 2023 was one of those years where looking at the number, you don't necessarily get a true view of what actually happened during the year in terms of complexity and excitement. Revenue were up around 5% year-on-year, which was driven by the leasing that was done by the company, but also by further indexation. FFO was down, I think that was very much expected in light with the increase in leverage that we've been introducing to the company over the year, which has -- now play on a full year basis, we had a reasonable stable leasing result, and I'll come back to that, but in a minute, but with sometimes a different composition of the leasing results. And the overall transaction market, as you know, ended up in a reasonable standstill in 2023, which led to material devaluation of the portfolio, which reflects the external valuation of the portfolio by third-party value at year-end of around EUR 770 million. And all of that led to an EPRA net tangible asset of EUR 9.10 per share, and a balance sheet LTV of 56.4%. I'll come back in more detail on all those numbers. But again, I think this is one of those years where you probably need to get more into the detail in order to better understand the different dynamics behind those numbers. If we look at the portfolio, the main news here was related to the devaluation of the asset. As you can see, and if you compare those numbers to the one that we had last year, contractual rent is pretty much stable, the WAULT is pretty much stable, the vacancy rate is pretty much as stable. The only thing that has changed in the year was the valuation yield, which is now running at around 5% and reflects what I believe is an extremely low and reasonable value per square meter of EUR 2,860 per square meter on an office portfolio of alstria's quality. It kind of reflect, I think, the difficulty that value has, to look at portfolios in the current market with the lack of transaction. So essentially, valuation driven by yield movement in the market or assumed yield movement in the market by my third-party valuers. If we look into the letting, we have achieved slightly more letting in terms of square meters this year than the year before. However, with the complete different compositions, we have been retaining much more tenants in our buildings than the year before, and we've been leasing up nearly this at a slower pace than the year before. That has to do both with the structure of the portfolio. So this is both related to alstria peculiar situation where we had a lot of renewal, which were happening this year and not so much new space coming up to be leased up, which explains the high level of renewal across the year. But it also, I think, highlights some more dynamic in the market where the average leasing is smaller than it used to be, the large corporates are still pretty much -- well, most of them, out of the market. And therefore, it takes -- I mean, we are leasing just as much space as the year before, but the average lease that we're signing is smaller than it used to be, that works relatively well with our portfolio, as you know, we have assets which are smaller than average. And so we're comfortable within that market. But I think the dynamic in the marketplace with smaller assets being leased up is still something which we're seeing continuously and not slowing down. We're also seeing that the tenant demand is focusing on the higher quality assets, so within the assets which are refurbished. And that is going to lead us to basically continue with our CapEx program because while a lot of our competition is slowing down, we believe there is value today and continuous investment in the portfolio, delivering the amount of space, the quality of the space that the tenants are looking for and being able to position those assets in the future in their respective markets. And as such, we have invested is around EUR 140 million last year in the portfolio as part of our development pipeline. There is more detail about that in the additional real estate information that we publish on our website. If we move more now away from the operation and look how all of that reflected into numbers, starting with the investment properties. The 2 effects we just discussed on one hand, the CapEx, which increased the value by EUR 137 million. We did disposal of EUR 3 million. So that was a very small property in Eschborn, nothing really remarkable here and obviously, the devaluation of EUR 770 million, which drive the entire investment properties, entire P&L and the entire balance sheet for the year 2023. If we look back at the impact on the balance sheet, investment property we just discussed, our net financial debt and the equity are driven essentially by 2 elements. The equity obviously by the P&L loss that we've made, but also by the EUR 250 million of special dividend that we paid at the end of the year, and that's going to be true also for the net financial debt. The difference between the two numbers that you have here is mainly driven by the special dividends that we've been paying at the end of the year, which reduced the cash available to the company and therefore, increase net financial debt for the company. From an EPRA NTA perspective or an NAV perspective, if you want. We are basically booking an operating profit of around EUR 0.50 per share, which is the FFO. There was a dividend payment of EUR 1.47, the EUR 250 million of special dividend plus the dividend that we've paid in the course of the year, the lion's share of the change in the NTA is again driven by the negative revaluation, which lead us to an EPRA NTA per share of EUR 9.10. Looking on the liability side of the balance sheet now and more on the third-party liability of the balance sheet, the net financial debt, as we've discussed previously, have just increased, mainly driven by the change in cash and cash equivalent, which resulted in the payment of the dividend. Our average cost of debt is still at 2.6%. Having said that, our marginal cost of debt is closer to 4%. The net LTV of the company has increased as a follow-up on the dividend payment and the increase in leverage with net debt to EBITDA, which is around 15x as we speak, while the average debt maturity has remained stable as we did refinance a lot of the bonds that we had due in 2023 and the debt we had due in 2023. In 2024, we have 2 loans, which are coming to maturity. One of them has been extended already, and we're finalizing the extension of the second one. So for all practical purpose, our next material refinancing kind of agenda point is going to be the 2025 bonds, which mature in September next year or in Q3 next year. And that's something we're going to be anticipating in the course of this year and putting together the financing in order to tackle that next maturity. If we look at the profit and loss, as we've discussed as well. The gross rental income is up by 5%. That's driven both by new leases that have started and by indexation that has been kicking in and will continue to kick in, in the course of 2024. Fund from operations are down around 17%, which mainly reflects -- and I'll come back to that in a second, which mainly reflects the increase in financing costs. And SG&A are also down 21%. That's something we've discussed also last year, if you remember, we've highlighted that as SG&A in 2022 were impacted by the transaction that we've done with Brookfield, that a more normalized level of SG&A is going to be around the EUR 20 million that we're showing here. Moving on to the REIT covenant, which is one of the items, I think we wanted to discuss this time because we had a number of conversations around it with investors. We had -- as you know, there are essentially 3 covenants in terms of REIT, among others, but those are the main 3 covenants that we have. One of them is a 10% ownership. So none of our shareholders can own directly more than 10% of the share of the company. We were in breach of that covenant, but that has been restored as of 31/12/2023, so this one is cured. The next one is a free float covenant. We currently have 4.8%. And what is required is 15%, and this will need to be restored by 31/12/2024. If not, the company will become taxable as of January 1, 2025. And the last one is the G-REIT equity ratio, which we are currently at 43% following, again, here the devaluation where we require 45% so that the relationship between the equity of the company under IFRS and the investment properties on the balance sheet of the property. So we're currently at 43%. And that will need to be restored by the end of 2025. For those of you who have been following alstria for quite a while, you might remember that we were in breach of that ratio back in 2008. So usually a material deviation of the portfolio over a very short period of time, lead to the breach of that ratio, but that's something which is not extremely worrying because it's essentially reasonably easy to correct. Moving away a bit from the financials, at least our usual financials I'd like to spend like 2 minutes running through our carbon accounts. As you know, this is something we've been publishing for now 3 years, 4 years. And we're basically looking at or trying to build up a P&L on the balance sheet, which is looking at the company from a carbon perspective and looking at how things are changing over the years now that you have multiple years going forward. What we see this year is -- and if you're interested, the full set of accounts you can download from our website, what is interesting to see is that from the carbon liability, so basically the potential cost for the company moving forward of carbon, we have been working pretty hard on reducing the company emission, which has had a substantial impact downward on the carbon liability of the company, but that was obviously compensated by the increase in the carbon price, which basically kept our carbon liability stable over the period we're considering here, which is between 2020 and 2023 -- end of 2023. On the other hand, on the carbon assets, which is basically looking at how much carbon it would take to rebuild the portfolio of the company today, we've basically seen a material increase is in that value, obviously, here following the material increase of the carbon price over the period. What is also interesting this year is, for the first time, the carbon equity which basically means the value of the carbon to the company's shareholders has turned positive. So the things we're doing from an ESG perspective and the sustainability perspective would be -- if you were to put a price on carbon, would actually create more value than harm to the company. And that will translate around EUR 8 million of positive value for the company. And then if we look at the company P&L, which basically reflects our performance in terms of our ability to reduce carbon, as you can see, this year, we've end up with around EUR 29 million of income in terms of carbon P&L, which basically reflects the ability of the company to materially decrease some of its emission following essentially the management and the takeover of the management of one of the assets that we owned in Stuttgart from the former tenant, which would substantially increase or reduce the emission and therefore, increase the profit for the company, again, assuming carbon would have a price. I'm not going to spend too much time on that. And moving on to the outlook. We still expect that the investment market will remain weak for the main of 2024, although we still believe that some transactions are going to be taking place and we're seeing some like green shoot of activity in the smaller markets with smaller volume of assets. The leasing market, we believe, will remain at the current pace. We have strong differentiation, which is made by tenants between assets with strong qualities and good amenities and we still believe that the large assets or the large leases are going to be out of the market for the foreseeable future as they're still reviewing the legacy portfolio. We expect to continue to see dynamic activity within the smaller leasing market, which we intend to benefit from. And we still believe that the main driver in what is happening right now in the real estate market is being driven by the way interest rate at central bank are behaving and the volatility in that market or the lack of visibility on proper stabilization of interest rate and availability of financing is still going to be a drag on the real estate market as long as the situation remains what it is. So that's it on my end. And I will now open the question -- to Q&A.

[Operator Instructions] The first question comes from the line of Michael Chakardjian from BNP Paribas.

Can you hear me?

We can hear you.

So I have a few questions. Can you tell on your -- on Page 19 on your loans, which you talk about. Loans number 2 and 5, can you tell me what the value of the assets are on the loan, and can you confirm that the bank LTV, which you normally would disclose on this page, is it around 67%? The next question I had was you said you're on the 2024 loans, which are about to -- which are maturing in 2024, they are about to or been extended. Can you tell me if it required any extra collateral, the terms, what's the LTV on those loans? Then you also talked about you anticipate having a plan for the refinancing of the '25's. Any comments on that? What is the type of plan you have in mind? What are the things which could impact it? And then obviously, the big large elephant in the room, what's going on at the [ topco ] loan. There was no mention of it in the report, it matured in, I believe, January 29, an update there? And can you -- then does -- having no update there -- if there is no update there, does it impact your refinancing plans for the debt you have at the company level. That's it for me.

So I'm just going to try to summarize briefly the question. You're speaking on Page 19 of the annual report, right? And about loan number 2 and loan number 5, if I'm not mistaken, right?

Yes.

Yes. So I think the reason why you don't see -- I mean, first of all, we don't have any default LTV covenant. So none of those LTV covenants are relevant from a default perspective. Those are cash trap covenants, so they don't empower any substantial risk at the company level. And when you have an N/A in there, it's basically because there is no covenant in the loan...

But you did disclose them on the previous quarters.

But then, again -- give me 2 minutes, so I can get you the information. I don't have a problem with that, but that's basically what the N/A mean in the context of that thing. And so the 2 loans that we're refinancing. One of them was just an extension. So there is no additional collateral. And the other loan that we're currently discussing is basically we're not adding collateral, but we're taking out one property out of the collateral pool, and therefore, reducing the loan amount. We're taking out the refurbishment assets, which the bank are currently not comfortable into financing, but there is no additional collateral, which has been provided through any of those loans. The 2025 refinancing, our intent is, and I think we've been reasonably transparent about that, is to refinance most of our loans right now in the mortgage market which we are currently doing. And so we are in the process of refinancing or putting some portfolios out to our partner banks in order to seek mortgage loans. And the intention is to do that almost all the way through the current bond that we have unless the public bond market, come back to a more sensible level of spread which would then become more attractive to us.

Perfect. And then on the topco loan, how come there was no mention of an update on that, the one which has matured?

Because the topco loan as far -- I mean it's not neither related nor -- I mean, for us, it's equity. So it's not -- it has no link to us. And I think this is a question for our shareholder. I have no specific insight into it. So -- and as far as I'm concerned, if there was no update, then really nothing happened there. So it's not publicly available information. That's another way to say it.

The next question comes from the line of Silvia Duranti from GSAM.

Can you hear me?

Yes.

We can hear you.

Okay. Great. Just a follow-up, since you mentioned that you are planning to refinancing the bond with mortgage debt. How many -- how much is there actually unencumbered asset pool as of Q4 after the property decline that you have reported in January?

So we have reported the ratio between unencumbered and encumbered assets within the annual report, and we're still constantly -- I mean, reasonably comfortable with the coverage between the 2. It's on Page 22 of the annual report, you're going to have the full calculation.

Okay. And just for me to understand, so if you're going to -- based, let's say, on my calculation, if I take that unencumbered assets, then I get a sort of max EUR 200 million headroom to raise additional secured debt or mortgage debt with the banks, and that is lower than what -- than the amount to refinance with the bond that is maturing 2025. However, because you have an incurrence covenant, does it mean that you can take as much as you can on mortgage debt to refinance the existing debt as long as you don't take new secured -- new debt in general?

Yes. So I think -- well, I can't comment on your calculation because I haven't seen it. And again, I will refer you to the report on Page 22, where you can see our calculation. But you're also right in saying that those are incurrence covenant. And as long as we basically use the debt to repay existing debt than those covenants do not come into play essentially. And which is our intention. Our intention is not to increase the leverage at the company level. But whatever debt we take right now is going to be used to repay existing debt and also [indiscernible] things for that matter....

Okay. clarification. That's clear. And I appreciate that, of course, the topco sort of loan at [indiscernible] -- is not something that you can comment on, but is, of course, taken into account in the rating calculation and you are already investment -- high yields from -- at issuer level. So my question is, has this affected your ability to raise additional bank debt? You mentioned that there was for one loan, some discussion with the bank. Can you elaborate a bit more on the discussions that you're having with the banks for potential refinancing of other loans and bonds?

No. So the banks -- we're speaking to our mortgage banks. So they're looking at the real estate, and they are not so much concerned about the rating of the issuer. So the security is essentially on the assets. I mean -- and the refinancing of the [ fund-raise ] market, which is -- I mean, the way the German banks are refinancing real estate mortgages. So the rating itself has no bearing on our conversation with the bank right now. I mean, obviously, it kind of has a psychological impact, but when you bring everything back to numbers, there is no material impact. And I mean, the fact that our rating has moved, has no implication whatsoever on the -- on our conversation with the bank. I think everybody is reasonably kind of -- everybody can see that if we refinance all our liability currently within the mortgage market, at one point in time, there is going to be a disconnect between -- not in covenant terms. But in terms of ratings, there might be a disconnect between the requirement for investment grade and in terms of secured versus unsecured and where we're going to end up, it's kind of mathematic. So I mean, in short, it doesn't impact our conversation with the banks.

Great. And then one last question from my side. It's a bit more a strategic question. So one of the premises of the takeover agreement by Brookfield was the intent to support the management with the continued execution of the business strategy, like, for example, value-added refurbishments, capital recycling, accelerating the ESG strategy. So appreciate there have been increase in development CapEx, but not so much on capital recycling. And let's say, the current asset decline is a bit hurting the portfolio base instead. Then in the meantime, the liquidity and the credit profile have deteriorated. So in terms of your position in the market to do capital recycling has become a bit more difficult. So can you comment on what is your expectation of your Brookfield support as it was stated at the beginning, can we expect future support at least on the capital recycling and the two things that I mentioned.

Yes. So look, I think maybe the reason why we decided to do the transaction with Brookfield back in 2022 is because we wanted to cooperate and work with somebody who actually understand the dynamics of the real estate market. And I think what Brookfield and us, and I clearly don't speak for them, but from my conversation with them, have -- share or understand is that the real estate market is cyclical. And from time to time, there is a moment where market value drop and when that drops, that slowed down your capital recycling. And I don't think they or us think about this transaction in terms of quarters, but in terms of years. And so yes, there is currently a moment in time where the market has dropped, have dropped at least not from a transaction perspective because there is no transaction. But from a perception perspective, and therefore, we have slowed down the capital recycling, but that's in our world is not something unusual. It's something that happens, and you need to be prepared and live with. It's kind of extend the duration of your business plan, but it doesn't change the underlying fundamentals. So I think we still share with you -- with them that there is going to be more need for CapEx. And as you rightly highlighted, we did not slow down on that front, and we're still continuing and going on with our plans because we think there is value in repositioning the asset when everybody else is stopping. And we also believe, otherwise, I wouldn't be sitting here anymore that the downturn that we're going through right now is not eternal, and that is going to bounce back at one point in time. And that's going to be the moment in time where we're going to continue to accelerate capital recycling. What I also mentioned during the call is that we are seeing some green shoots in some of the smaller part of the market. And that I think one of the benefits of alstria is we do have a relatively granular portfolio. So I think we're going to be able also to recycle capital in some of the smaller projects that we're doing, probably faster than if we were just owning very large assets, which were -- much less liquid in any shape or form.

The next question comes from the line of Antonio Casari from Northlight Investment Services Limited.

So most of my questions actually have been answered, but I would like to come back to a couple of things. First, can you give us an indication of what you expect as CapEx for 2024. And based on that, how much -- what is your expectation in terms of the movement in investment property in 2024?

So I mean if you can tell me where interest rates are going to be in 2024, I can probably answer the second part of your question. But I can answer the part, which is in our hands, which is how much CapEx we intend to invest in 2024. And that's basically -- you would basically find that information on our website, there is a document which is called Additional Property Information. And in that document, you have on Slide 6, a page which is called refurbishment project, which basically gives you a list of all the projects we currently have on our development list and as well as where we stand and how much CapEx is expected to be spent over the lifetime of those projects. In total, we have around EUR 276 million, which is part of those -- of those refurbishment CapEx, some of those have already been spent. And so we have around EUR 150 million we're expecting to spend in 2024 and mid-2025 to complete that project.

So all EUR 150 million between '24 and half of '25?

Yes.

Okay, perfect. Interest, your -- so when you see the value of the properties you made reference to the interest rates. So how do you see your 5% yield compared to -- so you see your 5% yield valuation linked to the current interest rate or so -- interest rate getting lower, do you expect a rebound in the value? Or -- so it'll be interesting to hear your perspective on the 5%.

Today, there is no transaction evidence in the market. So the valuation of the portfolio is a model that make a number of assumptions about the third-party model, would make a number of assumptions about what an investor would expect if there was -- if there were a transaction in the market, but there is no hard evidence you can relate to, to say this is where the market is stabilizing. And that's really the, I think, the conundrum we're all into. So I think in order to have a better overview about where the value is going to end up having transaction would help. But what I highlighted during the presentation is -- you're looking at the portfolio -- at an office portfolio in most of the largest German city at EUR 2,800 per square meter. I mean the land value alone is probably EUR 1,000 per square meter. So you're looking at construction -- so you're like substantially below construction cost. And so I feel the value of the portfolio -- but this is really my judgment. And yours is just as good as mine, is that this is pretty conservatively valued portfolio.

Absolutely. I think we've seen, though in many sectors in the real estate a dis-alignment between the yield side of looking at the portfolio versus the value per square meter. I think it's almost -- now it's almost applicable to all residential and office's real estate.

And so the way we're looking at it is -- I mean, I would be a buyer of assets in Germany for EUR 2,800 per square meter because I know how to make profit out of them over time. But in order to get there, you need to believe that there is going to be an office market in the future, which I do, but then again, that's probably the conversation you want to have.

Switching to the mortgage loans that you are discussing with your banks to fully finance in '25. Can you give us an indication of the terms that you are discussing in terms for extending your loans or what margin and coupon are you -- are you extending the '24 loans?

Yes. So essentially, today, within the margin market, we are achieving, I mean, depending on the assets that you're mortgaging, we are achieving spreads somewhere between 130 and 170 basis points over 3 months [indiscernible] for loan with a maturity of somewhere between 5 and 7 years.

Very useful. I would like to come back one second to topco. And in terms of -- I understand that you cannot give us visibility on what's happening at topco. But on the other hand, can you give reassurance that no dividend -- no further dividends will be paid by alstria in order to service any debt at topco?

No. So you mean special dividends. I mean I don't know what the future is going to be made of. I know this year, we're not paying a dividend, at least for this AGM. But then if next year, we made EUR 1 billion of profit I can't guarantee that we're not going to pay a dividend. So...

But you don't have any, let's say, the topco does not create any obligation from you to pay any dividend or to service any debt at topco. That's the point.

No. So as I said, I think in my previous answer, there is no link whatsoever between the debt at topco and alstria. I mean, the topco debt is basically for us it's equity. It's -- I mean, how our shareholders financing itself is we have no obligation, no collateral, no -- I mean we're not a party to that contract. There is no asset of alstria securing that contract. It's -- it's an independent contract. So the dividend policy of the company is also unrelated to it. But that doesn't mean that we will not pay a dividend in the future. But we...

No, actually. I understand that. From our perspective, I think having confirmation that there's no cash paid debt at topco would be further reassuring in order to reduce the risk of having paid -- dividend paid from alstria, that's the point.

So again, as I said, we don't have any like legal obligation, we're not a party to that contract. We -- there's no collateral of assets. There is no obligation. The only obligation we have to pay dividend is linked to the [ REIT law ]. And our dividend policy today is that we will be paying the minimum dividend, which is required by law, and that's what we intend to do.

Okay. And very last question. In terms of -- do you have any material contracts that go for renegotiation over the next 12 months? And do you have any color on any contract renegotiation that happened recently? And have you seen any pushback from clients in terms of either reducing space or asking for lower rents?

So we have a weighted average lease lengths of 5 years, so I mean you can blend it the way you want. But every year, we have around 20% of the portfolio that comes due. And as I mentioned, this year, our vacancy rate -- our EPRA vacancy rate is pretty much stable at 8%. Our revenue also going up. So you have conversation with tenant all the time on multiple fronts. Some of them are reducing space, some of them are exiting space. There is not so many who actually reduce rents because usually, they want to achieve a higher quality, not a lower quality than what they currently have. So we don't have any major concern from that front. I think the leasing market in Germany is still doing reasonably well. And as long as we're able to invest in the property and reposition them we should be able to make the best out of it.

The next question comes from the line of Thomas Leys from abrdn.

I just -- I wanted to ask a bit more about the covenants. I know you're obviously not going to predict where property value go. But given the standstill that you comment on in the market, 0 transactions or very few transactions. Just wondered if you've done any scenario planning just if -- it looks to me that in a sort of single-digit scenario decline from here, we'd still see you breaching or exceeding some of the covenant levels on the individual loans and the consolidated level. Just wondering whether you thought about the potential consequences of a 5% or 10% decline in values in the next 6 months, what that would do in terms of equity cures or your access to finance generally from those loans and just at the consolidated level as well.

So essentially, within -- I'm assuming you speaking about our mortgage loans, right? Because essentially on our mortgage loans, again we do not have default covenant. So even if the LTV was to go above whatever the number we're showing in the report, on a loan -- per loan basis, what would happen if you were to enter into a cash trap, which means that the money which is or the rent, which is produced by those assets will be cash trapped, so cannot be used for anything else than operating those assets for the foreseeable future and as long as the loan is a loan. So there is no risk from the LTV, and this is something we've been extremely kind of -- I mean, really strict on with our banking partners. So we don't go into a loan, which have a hard breach covenants that would trigger a default. So we do not...

Yes, you -- so if you looked at the impact if they were to all -- if they all fell down, the values fell by 5% or 10%, what the cash impact would be then in terms of your available cash flow for unsecured debt service...

The unsecured debt -- the unsecured -- I mean our portfolio, which is unsecured is still substantially higher and bigger than the one which is secured because the LTV on the secured debt is higher than the LTV on the unsecured debt. And then the -- I mean, every asset is servicing itself to a certain extent. So the cash trap is pretty painless. Because I mean, the assets are literally servicing themselves.

[Operator Instructions] We have a follow-up question from the line of Michael Chakardjian from BNP Paribas.

Can you hear me now?

We can hear you.

Perfect. I understand you have -- it's an incurrence covenant on your debt structure. But the -- so when you talked about your bank levels, you said spreads 130 to 170 bps on a 5- to 7-year maturity. Can you tell us what type of bank LTV are you getting on that? And then on the ones which you're rolling in 2024, I have -- you have one of them currently at 67%, and the other one, which is N/A, which I think is probably going to be above 60%. What's the LTV on the roll, which is happening? Then one last one is on the -- I understand you not talk -- you haven't talked to your Brookfield about the topco loan, but you talked to them about general markets and other things. If you don't have the bank to access to basically take out the whole 2025 bond, have you talked to them about showing support for the structure? And then on that same point, from what someone else was asking about the dividend, I think he wasn't asking about the legal obligation to pay a dividend to Brookfield, but have there been any commitments -- soft commitments to help to do a special dividend to them given that they have -- I understand it's equity, the topco loan, but it's also something within their interest, which is connected to alstria. So if you could answer those questions, that would be fantastic.

So I mean I first want to answer the first 2 questions you asked. Loan 2, the LTV is 62.8% and loan 5, the LTV is 65%. In the meantime, I got the numbers. The average LTV at which we're refinancing the loans today is around 60%, slightly short of that, between 58% and 60%. And that's something we've been doing across the board on the different loans that you have. And this is why you have some of the loan today, which have LTV which is higher than that because the value has moved out compared to the moment in time where we refinance them and then the LTV went up with it. I mean, again, with respect to the topco loan, I mean, I clearly cannot comment on that. And because there is no such a thing as a soft commitment as far I'm concerned, and I -- it's really not something I can confirm or infirm. The only thing I can say is that there is no -- like there is no obligation from the company to do anything in that respect.

So if they ask you to do a special dividend or -- that's not on the cards or something which you'd have to consider?

As a shareholder from that perspective, they have the right at any moment in time to send a notification to the company that they want to call an AGM, and they want the company to pay a dividend with the cash, which is available on the balance sheet. That's a legal right that they have under German law. If they do that, I would need to call an AGM and then the AGM will need to decide.

Perfect. And then lastly, can you explain the rest -- what do you plan to do with the bonds you booked back during -- I assume it was during 4Q? And which -- can you tell us what security it was of the 3?

It's actually available on our website. If you go in each and every -- on each and every bond page, you would see how much of that we own. So it's all fully available in the public domain. And we just acquired bonds, we're basically reacting to inbound inquiries of people calling us and saying, "I want to sell the bonds." We're not actively pursuing any of those things. And we're using the money we raised with our last mortgage to do that. I think it was more skewed towards the long-term maturities than the short-term maturity. But it's all on our website. If you go on each and every page, you would see exactly the amount that we currently hold.

The next question comes from the line of Thomas Rothaeusler from Deutsche Bank.

Olivier. It's Thomas. Just one question. It's more a general question on mortgage lending in Germany overall. I mean on the back of the trouble of some of the mortgage lenders, I mean do you sense any limitations with regards to access to mortgage lending? And how did this evolve maybe that would be my question, actually.

Yes. Thanks, Thomas. Nice to speak to equity. It's -- actually, we -- the situation has become a bit more complex recently than it was 1 year, 1.5 years ago. That's for sure. But I don't think that you can blend that into each and every bank. I think there are very specific bank where we can -- you can sense when you're speaking with them a level of stress, which is higher than with others. And if you allow me, I'm not necessarily going to point finger at any of those banks. But as far as we can see, there is still appetite for mortgage lending. The way we're doing it is we are able to put together some small portfolio with 5, 6 assets with a maximum volume of a loan of around EUR 100 million, which is still palatable for one bank. So you don't need to go into a syndication or you don't need to go into a top deal because the more you have cooked in the room, the harder it is. Obviously, it's very time-consuming compared to issuing the bonds, and this is why we start relatively early in that process, although the [ finance limit ] is only due a year from now. But I think, at least from what we can see today, if you do it this way, you're still able to find appetite, allow for the banks to distribute those loans within the network and then be able to come back for more. If you're trying to refinance EUR 1 billion or EUR 0.5 million in one go, it's probably much harder to be in the current market.

We have a follow-up question from the line of Antonio Casari from Northlight Investment Services.

Sorry. I was trying to understand how much is the value of the asset that has been taken out from the refinancing of the one of the '24 loans? How material is that? Because I assume that would need to be refinanced outside of that loan?

Yes. So on this loan, we're basically reducing the loan amount by around EUR 25 million, which is around about the value of the asset we're taking out.

But does it mean that -- so you have the day 1 reduction in your cash balance by EUR 25 million and then try to raise debt on the same assets or different assets to...

Yes, yes. But -- yes, we are raising that on a different asset. We already did that actually.

Okay. And what is the timeline that you have in mind in terms of completing the exercise on -- to have the funds available for refinancing the '25?

As far as I'm concerned, the deadline is on the date where the bond are due.

Yes, though from a German accounting perspective, is it really or 12 months before approval of '24 annual reports?

No. As far as I'm concerned, again, as long as you have us -- believe you're going to be able to come with the money on the date where the money is due, that's a reasonable assumption.

[Operator Instructions] It seems there are no further questions. I will return the conference back to the speaker.

Well, thank you very much, and thank you for your interest in alstria. We're looking forward to discussing our Q1 results sometime in May. And in the meantime, both Ralf and myself would remain available. If you have any follow-up questions, you can always reach out, and we'll be happy to address them as much as we can. Thank you very much for your time and looking forward to speaking with you for the Q1 results. Thank you. Bye-bye.

Thank you. This now concludes our presentation. Thank you all for attending. You may now disconnect.