CORESTATE Capital Holding S.A. (CCAP) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. Welcome, and thank you for joining the CORESTATE Annual Results 2021 Conference Call and Webcast. [Operator Instructions] I would now like to turn the conference over to Dr. Kai Klinger. Please go ahead.

Thank you so much. Ladies and gentlemen, thank you for joining us today on our earnings call for the presentation of our preliminary results for the financial year '21. On the CORESTATE Investor Relations website, you can find our earnings press release and the corresponding slide deck. As usual, I'd like to draw your attention to the forward-looking statement and the disclaimer wording on Page 2 of our presentation. This safe harbor language applies to the presentation and all comments we'll be making today. I would also like to mention that everything is being recorded. You can replay the call and view the transcript on our Investor Relations website after the call. Please be aware, all information on financial year '21 we give you today within this presentation is preliminary and not audited. With me on the call are the new CEO of CORESTATE Capital Group, Stavros Efremidis, who many of you already know; and our CFO, Udo Giegerich. We will guide you through the presentation, followed by the usual Q&A session. The time frame for today's call is about 45 minutes. Now it's my pleasure to hand over to Stavros. Stavros, the floor is yours.

Thank you, Kai, and good morning, ladies and gentlemen, and a very warm welcome from my side. As you have probably heard or read today, the company announced the completion of a very successful fiscal year '21 and the comprehensive reshuffle of CORESTATE leadership structure. I'm therefore very pleased to introduce myself to you as new CEO. But before we go on with our presentation, I want to do a quick side remark regarding the postponed of the publication of the audited consolidated financial statements we have announced also this morning. Yesterday, we were informed by Ernst & Young that they have not yet fully completed their audit procedures in certain subareas focusing on CORESTATE Bank as planned. As a result, the publication of the audited consolidated financial statements has been postponed. We have therefore published the preliminary and unaudited financial figures from 2021 today. The company has, of course, already prepared the annual financial statements 2021 in full and firmly believe that the ongoing audit procedures will have no impact on the state figures. However, we expect the audited consolidated financial statements to be published promptly at least by March 31. Now we can move on Page 4, please. At first, allow me briefly to introduce myself and describe my motivation for this decision. Starting as a shareholder with a significant stake in the company and having become Chairman of the CORESTATE Supervisory Board last year in December, now the ideal time has come for myself and for CORESTATE to dare a comprehensive entrepreneurial new start. And to be honest, this was not original my own idea, but it was initiated and driven by René, the former group CEO, after we had to fill a central vacancy at the CORESTATE Bank level at short notice in January as Executive Directors there. With his professional background, he was the ideal candidate. We have known each other for decades. With René, we can pursue a substantial growth path even faster. In combination with the Executive Board seat at AFS, he can now put all his energy into successfully expanding our debt business, based, of course, on a fully institutional approach integrated into our group structures. In accordance with German regulatory and supervisory requirements, this role should not be exercised as a dual function together as an active member of the group Board of Management. My own motivation to returning to operations is also easily explained. I have already invested a significant amount of capital. And in addition to my many years of experience as CEO in the real estate industry, I also bring my passion and my entrepreneurial and excellent network to the company. We have now put together an ideal management team for CORESTATE will start following the turbulence surrounding COVID and the shareholder changes of recent quarters. Together, we have nothing else in mind but to reinvest the company in terms of personally, strategy, operations and finance. As CEO, in addition to strategy M&A and my role as an impact generator, I'm primarily the contact person for our most important external stakeholders, such as clients and investors in our products as well as in our company on the capital market side. I'm also responsible for our real estate debt segment in close coordination with René. With Izabela as our new COO in the management team, we have promoted a woman from our own organization. It was a great deal to experience with transformation, corporate excellence, organizational development and ESG in top management position in the real estate industry. Her nomination was also a clear endorsement of our uncompromising focus on ESG at all levels. She will be also responsible for the holding functions in human resources, legal and compliance, IT and marketing. To strengthen our investment and real estate practice in the management team, we are pleased to have Ralf Struckmeyer on board as our new Group CIO. Ralf is a highly experienced real estate dealmaker who has been successfully involved in the top management of various real estate companies. I have known him for many years, and we have done many smart and exceptional transactions together. Ralf is head of real estate equity segment and is responsible for assets fund and transaction management as well as business development in the operating business lines. With our CFO, Udo Giegerich, and myself, the new management board will be composed of 4 members. It is also worth mentioning that our Supervisory Board Chaired by Dr. Bertrand Malmendier has gained a new and a very experienced member in Dr. Roland Folz. As a well-known banker and active CEO of a fintech unicorn, he will strengthen our competencies especially in the area of digitalization and scrolling. And I very much look forward to working together with my new colleagues on both boards as part of such a great team. Please flip now to Page 5. As you can see, there's a lot going on CORESTATE right now, and I'm very excited about the journey ahead. But first, allow me to start with briefly over few of the key initiatives and highlights from the past fiscal year 2021. The short and long-term market drivers in the real estate sector are fully intact. And as expected, CORESTATE has benefited from the economic upturn after the effects of the pandemic have subsided supported by another excellent performance in our equity and debt businesses. '21 was a successful year for CORESTATE. We again delivered significant revenues growth and achieved our forecast at all levels. Let me give you some more details on our figures later. My predecessor René did a decent job and achieved an impressive turnaround for the company last year. With the acquisition and integration of AFS today's CORESTATE Bank, he has formed a real estate investment powerhouse with a unique equity and debt platform. A key objective of '21 was to initiate the comprehensive transformation of the group. This has meant not only realigning the entire organization and simplifying structures and procedures of position CORESTATE strongly and flexibly for the future but also focusing the business model on core real estate activities to shape its profile in the market. One of the strategic decisions have been made during the past year was to divest a large part of the peripheral intensive and low-margin property management business and to spin off the noncore asset management activities. And another topic in the first quarter was a significant commitment of Karl Ehlerding and myself as a new anchor investor in CORESTATE. As part of the transaction, we replaced the 2 previous major shareholders. As a result, we have now implemented, realigned corporate governance structures and will successfully improve the level and quality of transparency and institutionalization of the entire group. That is my personal ambition. One crucial aspect in the internal perception of CORESTATE is a substantial progress in debt reduction and the readiness of refinance in 2022. In short, by the end of '21, the replacement and the essential cash conversion measures have not yet been fully completed. But for the most important position, my colleagues have either achieved in transaction closing such as Giessen and for the first tranche from the upfront or there's already a contractual obligation of the specific cash flow -- cash inflow. On this basis, we are very confident that we'll be able to successfully implement the upcoming refinancing before summer with a healthy set of figures. Looking back, I can say that CORESTATE is back on track and meet its financial guidance on all levels. CORESTATE [ Deutsch ] delivered outstanding double-digit revenue growth and [indiscernible] earnings improvement in '21, once again demonstrating a strong market position as dealmaker on our home turf. Please flip to Page 6 now. You see an overview on our assets under management on this chart. End of '21, the total assets under management went slightly down from EUR 27.8 billion to EUR 27.4 billion. The real estate asset under management within CORESTATE core equity and debt segment remains '21 more or less unchanged at around EUR 19 billion. We have already graphically depicted our future core business here. As indicated, we will gradually divest on noncore activities with an asset under management volume of EUR 8.5 billion. For this reason, they have been reported as discontinued operations in our annual report '21. At the beginning of '22, we have already successfully completed the disposal of the majority of our nonreal estate portfolio with the aircraft and media funds, which were originally characterized as rundown units away. In addition, the spin-off process for our property manager and operating Capera and CRM was also initiated. These portfolio measures are important strategic steps to sharpen our real estate profile and to focus on future-proof, high profitable business setup with vast synergies and less complexity. Let's now move over to the next slide, 7, where we start to quick through the specifics of our both core segments. While being confronted with the economic effect of the ongoing coronavirus pandemic and the related restriction of our sector, especially in quarter 1 in '21, the conditions for the business improved somewhat in the second half of '21. The volume of transactions involving attractive real estate concepts and the investment appetite of institutional clients went up significantly. We have [ followed ] on behalf of our clients several transactions and investments like the acquisition of the logistic portfolio in Paris region or the forward-looking office project VISION ONE campus in the south of Stuttgart. Other selected highly in the operation business were, for example, the acquisition of the office project Weitblick in Augsburg, the new school building and timber construction and portfolio revitalization in Munich or the opening of our landmark micro-living property TRIIIPLE in Vienna. In the course of the last year, the CORESTATE team followed constantly its operational agenda to enhancing the business activities and clients reach. The group streamlined, bundled and strengthened the own sales approach, resulting in a strong client focus on DACH region. We can see on this slide different split up of our EUR 12.4 billion real estate equity business. Beyond our specialties like micro-living, logistics or city quarters, the latter is subsumed under other. More than the half of the asset under management are office properties, mainly in Germany, France and Benelux. And as a side note, above 80% are core and core+ investments. At the bottom right of this slide, you can see a substantial and balanced maturity profile of this well-performing EUR 12 billion asset base with an average maturity in our real estate equity business of about 5 years, which is regularly improved by organic asset management growth. When I do look into the upcoming months and quarters, we expect further organic growth in all business units supported by a strong sourcing pipeline in advanced contractual status of around EUR 1.3 billion for our real estate equity operations. Please follow me to Page 8 of the presentation now. This page is about our real estate lending and financing business, where we are charged for gross asset value of EUR 6.6 billion with our more than EUR 1.2 billion mezzanine fund. This is based on track record of near 0 deferred rate over the past decade. At the end of the last year, we have financed through [ 3 ] evergreen fund vehicle 42 projects with an average finance size of around EUR 29 million and unchanged average loan gearing of 1.5 years. The focus has not shifted since years. The vast majority of the invested in the metropolitan areas in Germany, all 3 in Switzerland. Above 70% of the lending goes to the top 7 cities in Germany. And even more important for the performance of the funds, only 7% are residential and core projects which went through the crisis without any negative impact according to the ongoing high demand. Currently, we have provided funds to 23 different developer groups on a single asset basis, the largest counterparty of which takes no more than 70% in total. On the investor side, we saw more or less a stable development of the fund during the crisis without any significant project impairments and only minor churn. Based on the current performance of this double-digit return product, we feel very comfortably positioned, especially if we think of cross-selling effects from our integrated platform for real estate equity and debt product. The past year also saw a good performance by HFS, a leading provider of mezzanine finance of the German housing and commercial real estate market as well as the launch of new products such as Stratos, our new senior loan offering. Taking over German credit platform and fully licensed securities trading bank, '21 has not only uniquely rounded out CORESTATE's existing business model, but it would also put the company in a position to leverage a variety of value-enhancing synergies potential in its product offering as well as it is sales activities when approaching customers. We are absolutely convinced that this strategy was the basis for our remarkable performance during the crisis and will be foundation for a very profitable future. Therefore, we expect further organic growth in all lines with the CORESTATE Bank and the HFS business in '22, supported by strong financial pipeline of around EUR 0.5 billion for our mezzanine borrow business. In addition, we see that our CORESTATE Bank already mandated financing of projects in preparing of more than EUR 2 billion. Please follow me on Page #9 of this presentation. Despite the difficult conditions, I'm happy to report that everybody at CORESTATE kept extremely busy and our deal teams closed a large number of very attractive transactions in the course of the year. But what does that mean in terms of our figures? According to the financial guidance, which was still inclusive of discontinued property management operations, we expect to reach aggregated revenues and gains of between EUR 235 million and EUR 260 million. We finally delivered on a like-for-like basis, EUR 246 million. Our guidance for the adjusted EBITDA was between EUR 90 million and EUR 115 million, and we come out at the lower end of EUR 90 million. On adjusted net profit, we aimed a range from EUR 50 million to EUR 70 million (sic) [ EUR 50 million to EUR 75 million ], and we reached EUR 59 million. These figures reflect CORESTATE's excellent performance and come back in a still challenging '21, which we owe first and foremost to the hard work and dedication of the company's employees at all locations. With this, I would like to hand over to our CFO, Udo Giegerich. Udo?

Okay. Stavros, many thanks. And a very well welcome to all of you from my side. I'd like to give you information on our income lines in very brief. After solid business development in the first 6 months of 2021, we have seen especially an ongoing recovery in the second half of the year. In 2021, CORESTATE was able to successfully increase its aggregated revenues and gains by more than 28% from EUR 191.4 million to a total of EUR 245.5 million. The property management business for the third parties which is to be sold and therefore flagged as discontinued operations contributed EUR 30.1 million to aggregated revenues and gains in the reporting period. Considering that income generated by continued core activities increased 2021 by 33% from EUR 162 million to EUR 215.4 million on a like-for-like basis. Let us take a deeper look into the individual top line growth of the reporting segments. The real estate equity segment generated revenues of EUR 77.6 million, clearly above the prior year's level with EUR 70.4 million. Our equity transaction fees, including acquisition fees and realized sales and promote fees, climbed to EUR 32.7 million from EUR 20 million last year, what was mainly driven by an upswing of the general transaction environment in Q4. The asset and property management fees, including the development fees in this segment, went down from EUR 50.3 million to EUR 44.8 million, mainly due to a drop in our development business for micro living or better service apartment projects. The total revenue from real estate debt went up significantly by 30.6% from EUR 93.3 million to EUR 121.9 million, underlining the leading position in a very prospering market. In 2021, revenue from underwriting instruction increased, almost doubled from EUR 18.8 million to EUR 36 million, mainly driven by the consolidation of the CORESTATE Bank, its unique market position and a booming deal pipeline. Revenue from asset management and performance fees, including coupon participation fee, increased from EUR 64.2 million to EUR 67.8 million. Income from bridge loans grew to EUR 18.8 million from EUR 10.3 million, supported by the peak in lending over the year. Income from the other segments developed positively hand-in-hand with the improved market valuation and transaction environment after 2020. Moving on to Slide 11, please. With this chart, we would like to give you a little more background on our P&L figures and key ratios. All in all, we had operational expenditure in amount of EUR 99 million, down from EUR 111 million last year. And the OpEx ratio improved significantly by more than 20 percentage points to 46%. While the expenditure in the equity segment and in others went down, the cost increase in the debt segment was mainly driven by consolidation of the CORESTATE Bank. The G&A expenses of nearly EUR 45 million includes around EUR 17 million one-off expenses from M&A-related activities, extraordinary transformation costs and provisions for the already started efficiency program. The main focus for the upcoming quarter and years will be on improving the overall cost structure by taking out complexity, avoidance of double functions within the organization and using modern technologies and digitalization while increasing revenues. Our EBITDA for continued operations for 2021 stood at EUR 72 million and adjusted figures at EUR 90 million. It creates a significant turnaround. The adjusted EBITDA margin shows an impressive jump from 10% to roughly 42%. Depreciations and amortizations of almost EUR 40 million include also the consolidation effects from the acquired CORESTATE Bank. Our income tax amounted to EUR 3 million compared with minus EUR 7 million last year. The figure is mainly driven by usage of group tax effects from the first time consolidation of CORESTATE Bank and the offsetting of tax loss carryforwards in the German tax group. Our net profit for the financial year 2021 stood at EUR 18 million, corrected by M&A-related expenses in amount of EUR 11 million, depreciation of EUR 33 million on PPA-related intangibles, the provision for efficiency measures of EUR 6.5 million and deferred tax liabilities of EUR 9 million, the corresponding adjusted net profit shows more than EUR 59 million. The visible upswing and our cost discipline has helped us to achieve all these successful figures in 2021. Thus, as Stavros already said, we have met our business forecast in all budget lines. Please flip to the next page. Page 11 (sic) [ Page 12 ] provides an overview of the main balance sheet items at the end of the year. With just close to EUR 840 million in equity, the equity ratio improved to more than 51% at the end of 2021. By far, the largest component in our current assets is the goodwill position created mainly in association with the acquisition of HFS, Hannover Leasing, STAM and finally the CORESTATE Bank. All cash generating units of our continued operations show more than sufficient flexibility and headroom in the context of the semiannual impairment test. Investments in associates and joint ventures have increased in the course of 2021 results mainly from the short-term technical bridging of the project VISION ONE in Stuttgart metropolitan area, which was -- has already been placed with investors in 2022. Inventories went up, in particular, related to CapEx measures at the Giessen property from the corresponding restricted cash account. And other current financial assets, our bridge loans went significantly down to EUR 93 million at the end of the year. And our trade receivables position includes a short-term increase of around EUR 20 million from outstanding contractual sales and promotion fees from successful concluded deals in December. Total liabilities were relatively stable in comparison with prior year, while the noncurrent liabilities went down and the current liabilities increased almost by the same amount because of the reclassification of our convertible bond due to its maturity in November 2022. Turning to the next page, Page 13. As you know, one of the major tasks of the management team among other things is the noticeable reduction of net debt to aim an acceptable leverage ratio and thus creating a solid financial foundation for the group and its future-oriented growth path. Let me be very clear, we could certainly show some progress in this matter. In particular, in the last quarter 2022 -- 2021, sorry, but in all due to shifts in debt figures, we failed in our aspiration to achieve a leverage ratio of around 3x at the end of the year. Nevertheless, now we want to reiterate our goals, and we are steering the right course to achieve this ambition. I think you are quite familiar with this chart. What you can see, at the end of December, we had around EUR 622 million of total debt. This contains EUR 133 million bank and other debt, including EUR 54 million warehousing debt. With our cash pile of more than EUR 76 million, considering additional EUR 20 million for leasing liabilities or net debt -- our net debt stood roughly at EUR 527 million. Against the backdrop, we have redeemed EUR 30 million for the HFS bond and bought back already EUR 6.5 million of our convertible bond. Thus, this totals to an improved financial leverage on end of 2021 of about 5.9x versus 32.8x at the end of the year before. Against backdrop of the refinancing program, we will have -- which will happen in 2022, it certainly makes sense to provide you more color on our part of debt reduction and explain the various sources in more detail. As you can see on this slide, the crucial step of our cash conversion program for 2022 to reduce our net debt by some EUR 280 million. The starting point is an operating cash flow -- cash inflow of more than EUR 40 million out of our own fund structures from already earned contractual performance and promote and sales fees from 2021. Another EUR 50 million to EUR 60 million will come from repayments and replacements of our bridge loans if the future run rate for this position will be below EUR 50 million. Added to this is roughly EUR 90 million from the closing of the Giessen asset end of April and the cash conversion from other smaller co-investments in the first half year. Thus, for the second half of 2022, we have another EUR 40 million to EUR 50 million designated as proceeds from placements and the reductions of our co-investments. Furthermore, we expect usual inflows from 2022 performance fees at the end of the year of around EUR 50 million. In total, we will reduce our net debt position by more than EUR 280 million set through the year and deliver a healthy financial setup with a leverage ratio from between 2 and 3x as basis for our refinancing. We are currently preparing to go to the market with the refinancing of EUR 300 million straight bond well before the summer. The EUR 200 million convertible bond will be repaid from our cash position as announced. So to stress this again, debt reduction and financial derisking is a top priority for me and my colleagues in the upcoming weeks and months. With this, I would like to thank you for your attention, and please flip to Page 16. Stavros, turn to you.

Many thanks, Udo. In an initial prospect, we can state the German real estate market proved its resilience in many asset classes during the pandemic and remains very attractive for long-term investors. This is especially true of the ongoing recovery path of the German economy. Looking forward, we see that despite the continued presence of COVID-19 and the current war in the Ukraine, life with the real estate industry will gradually return to normality. Clear and targetable outcome of our current discussion with clients is that the real estate transaction market is already back in very vibrant state and risk appetite of the investor side is visibly increasing further. Basically, any company that wants to be successful in the long run has to constantly question and sometimes even reinvest itself especially when the operation conditions change. Now after a long pandemic phase and the changes in the Board and the shareholder base, the ideal time has come for the CORESTATE to dare a consistent entrepreneurial new start. We will therefore carry out a comprehensive rebranding within the entire group in the second half of the year and reposition ourselves vis-a-vis all internal and external stakeholders but, above all, in the real estate and capital markets. Focusing on our core business while establishing new and transparent corporate governance with a dynamic team will help us to unlock previously unused potential. Against this backdrop and in the view of the continued positive market development in the real estate sector, we again expect an annual organic new business driven growth in our core asset under management of 5% to 10% which will, of course, be reflected in our revenues and earnings. And yes, we also have to become more efficient and cost-sensitive. This will involve sensibly streamlining and harmonizing of our internal structures and processes. An ongoing efficiency program will deliver subsidiary cost savings of around EUR 10 million per year starting in '23 at least. Provisions of EUR 6.5 million for expenses relating to these programs were set aside already in '21. In summary, I can assure you that CORESTATE has developed strongly and presented good figures. We will now build on this and put the company on a substantive growth track. On the main objectives of CORESTATE newly formed management team will be also significantly reduce financial debt and complete the planned refinancing before the summer this year. A key element of this is a significant reduction of the leverage ratio to 2 to 3x in '22. In the medium term, we aim to reduce this ratio to below 2x on the basis of a strict financial policy. This will subsequently reduce our corporate risk profile to the greater benefit for our investors, clients, employees and business partners. In parallel, we will once again become for our shareholders an attractive growth and dividend stock. I'm highly motivated and committed to achieve this together with my new colleagues and the management and Supervisory Board. Please move to the last slide, 15. As usual, with our annual accounts, we would also dig in a little bit more now on what we see in '22 in terms of figures. The main message is clear. This year, operations will be driven by a more normalized and less volatile investment environment. In brief, we are dealing with a far more strong debt business, an equity business that is picking up momentum, and we can demonstrate further scope more efficiency and profitability on the cost side. So we are optimistic about the upcoming quarters. Hence, for '22, we expect now acquisition and sales fees in our real estate equity business of between EUR 30 million to EUR 40 million and asset and property management fees of between EUR 40 million to EUR 50 million. Please note that this the figures without the CRM and Capera's business. Our debt segment will show EUR 50 million to EUR 60 million of underwriting and structuring fees as well as on the midpoint EUR 75 million from asset management at coupon participation fees, including our bridge lending income. The other segments will deliver between EUR 5 million and EUR 10 million. Based on this, with our core real estate activities, we want to realize in '22 aggregated revenues and gains of between EUR 210 million and EUR 230 million and EBITDA of between EUR 90 million to EUR 110 million. On this basis, we are targeting a resumption of dividend payments that were temporarily suspended during the coronavirus pandemic and are planning to distribute at least EUR 0.50 per share as dividend out from '22 earnings in the '23 financial year. So all in all, the new management team is highly commitment to its goals and the entire company is very well on track to deliver what have promised. With this positive outlook, I would like to hand back to the operator, and we are now happy to answer your questions.

[Operator Instructions] And the first question is from the line of Andre Remke from Baader Bank.

Stavros, congratulations to your new position. I have a couple of questions, maybe question by question I would prefer. The first question is on your guidance. Does the EUR 90 million to EUR 110 million range relate to the adjusted EBITDA from continued activities, i.e., the comparable figure for the last year the EUR 90 million?

Andre, it's Kai. Yes, you're absolutely right. We are talking about reported EBITDA in '22. Last year, it was adjusted. And there we are talking about EUR 90 million adjusted EBITDA and reported in the low EUR 70 million in '21.

I.e., it compares the EUR 70.7 million and your guidance compares to that figure, the EUR 90 million to EUR 110 million.

Right, right.

Okay. And do you see any kind of adjustments to the EBITDA for the current fiscal year?

No. We have done our provisioning for our cost program already in '21. So we are guiding a squeaky clean '22.

Okay. Perfect. Second question relates to your AFS acquisition. You agreed on an earn-out component of 1.5 million shares, it's partly included in the equity already. Previously you stated that this will depend on certain income levels for last year until, if I remember correctly, '23. Could you elaborate whether this is still the issue? And do we have to expect or is that the 1.5 million new shares will kick in?

So we expect further that we achieve our internal goals. And if we are doing so, then of course, there are contractual obligations for another earn-out component.

And this has nothing to do with the situation from Ernst & Young that the report is still unaudited?

Absolutely not. It has nothing to do with that.

Okay. That's clear statement. Then the third question is on your real estate equity business. Well, this turned positive again last year, but still with a very limited margin. And looking at the revenue guidance for this business for this year, there seems to be limited growth or virtually no growth. Do you consider to keep this business or maybe completely focus on the higher-margin debt business?

No. Absolutely the opposite. So we are highly convinced about, first of all, the synergies between both debt and equity. And obviously, the stickiness in our equity funds, we are talking about at least 5, typically 10 years term, are much higher compared to our much more profitable debt business. Nevertheless, our internal cost allocation is not finally done now because we are still dealing with some internal cost structures and its allocation. So our current split up is a little bit misleading. Nevertheless, our fixed costs are much higher in our equity business, plus we -- if you see the turbulences in '21 and the still -- especially in the first half, reluctant investor base beyond the core or core+ segment, there we can see a clear upside in the future if the markets are in a much more normalized environment. So we are believing -- we are strong believers in our equity real estate business.

Do you expect a higher profitability for this year?

Yes, slightly, yes.

But only slightly. So it will go along with the revenue guidance in this business.

You know this industry quite well Rene -- Andre, I'm sorry. And you -- so it takes time to attract money. And if you are here in the driver seat and you can improve your upfront, your acquisition fees, then, of course, there's the juice in, and this is actually what we want to do.

Okay. Perfect. Then a question on the mentioned divestment process on CRM and Capera. When could we expect the next news on that? Are you already in negotiations with potential buyers? Or is this too early in the process at the moment?

We are here in the process. And usually, it takes time if you will find your final [ live ]. So this is nothing for the next weeks or months. But clear aim is to complete this in '22.

Okay. Very last question. On your efficiency program, you spent EUR 6.5 million last year. Do we have to expect any cost occurring this year?

Yes. So we have to -- we don't want to overpromise here, but there's a certain likelihood that we can see or harvest the first fruits out of that, especially on our raw material cost side because there it's easier to do it than on personnel. But the main impact will be fully materialized in '23.

Yes. But the -- this goes along with your first answer of -- on the adjustments to EBITDA that provisions are done. There is nothing more to come above the EUR 6.5 million.

Yes. Sure, you're right. Sorry. You're right. So we have there a clear game plan, and this is already provisioned in '21, last year. So again, nothing more for '22 expected.

The next question is from the line of Alexander Groh from Deutsche Bank.

Congrats to a good operating results. Maybe also question by question, if I may. So can you give details on the cash balance and how it has been evolving as from the start of the year?

The cash balance has not substantially evolved from the beginning of the year. We are expecting the closing of the [indiscernible] and the [indiscernible] project and the inflows rather soon. However, we have to wait there for the waiving of the preemption rights by the municipalities and especially the one municipality is Berlin and it normally takes some time to get these waivings then in.

Perfect. And your net debt, therefore, is also...

Yes. Net debt also quite unchanged.

All right. Then on bond buybacks, have you done any more until today?

We are continuously looking into this market but we have not done so far any further buybacks.

So it's the EUR 6.5 million that's still stands out.

It is roughly EUR 6.5 million, yes.

All right. Perfect. Then in terms of coupon participating fees, how much have you...

There was no substantial inflow cash change. So this EUR 50 million are still very efficiently invested in the Stratos funds and will produce interest there, but we have not received it.

When do you anticipate to get them? Is it before the refinancing or...

Before the refinancing, yes.