CPI Property Group ($O5G)

Good morning, and welcome to CPI Property Group's webcast covering our financial results for 2025. This is David Greenbaum, CEO of CPI Property Group. I'm speaking to you today from Prague, where the sun is shining and suddenly, it feels like spring. Outside our headquarters building, QuadrIo, which many of you have seen in person or in photographs, outside of our building, we have this large silver rotating head of the famous Czech author from Kafka. Because it's a beautiful day, there's probably 100 tourists on their Easter holidays watching and taking photos of the rotating Kafka head. I hope that some of these tourists will be staying in our hotels, and after they're done, I hope they will spend money in our Quadrio shopping center. So please spend for us, and we love you, and thanks for coming to Quadrio. Anyhow, it is a bright and sunny environment for hosting this webcast and that reflects how upbeat we feel about the progress that we made in 2025. On that note, let me introduce my colleagues who have joined me on the webcast. Please allow me to introduce Pavel Mechura, our CFO, and Michal Felcman, Co-Head of Group M&A and Deputy COO; Kveta Vojtova, Co-Head of M&A and Head of Transaction Legal; Stefano Filippi, Head of Corporate Finance; Mindee Lee, Head of Corporate Strategy; Petra Hajna, Group Sustainability Officer; Petr Mizera, Head of External Reporting; [indiscernible] Marketo Vetarova, who handles our bank financing, Martin Matula, our General Counsel; and Moritz Mayer, who's responsible for Capital Markets and Investor Relations. So you really have the whole CPIPG team here on the webcast.. After we're done with today's presentation, we will answer any questions that you would like to ask about our results in 2025 and our plans for 2026. As usual, we will do our very best to answer each question. To ask a question, please use the question tool on the webcast as we go along. We will compile the questions and reply to you at the end. Today, we will be referencing CPIPG's 2025 management report, and you should be able to see the relevant pages displayed on the webcast. The same management report is also available on our website, cpipg.com. If you have any technical issues, please reach out to Moritz even during the call, and we'll do our very best to sort it out. Okay, so let's talk about CPIPG's performance in 2025, and I will also give you some perspective on how we're seeing 2026 before turning the floor over to Pavel to walk through the key figures. In general, 2025 was a year of stability and cautious optimism in European real estate. The operating environment improved as GDP growth picked up, especially in CEE countries like Poland and the Czech Republic. European interest rates were low, both base rates and longer-term rates. Bonds markets were open, our unsecured credit spreads tightened and bond markets became competitive with secured bank loans once again, which meant that banks were hungrier than ever and kept reducing the margins on our facilities. Transaction volumes improved, the group exceeded our disposal target, and we even saw signs that big deals are coming back. Our real estate portfolio continued to perform well. Occupancy reached 93% for the first time since 2022, and like-for-like rental growth was 3%. I may sound like a broken record, but construction activity is limited in our region, which is an enormous benefit for existing landlords. For example, Bucharest saw no new office completions last year, which is the first time we have ever seen that since the data has been recorded. Prague office completions were also at a record low, and office vacancy in Prague is back to pre-COVID levels, just about 5.9%. Our retail properties have 98% occupancy, and we continue to see rising consumption and increasing disposable incomes across the CEE region. Our hotels are doing great, including the new hotels we opened in Budapest and most recently in Bernau and the residential segment in the Czech Republic is performing well. We also did a lot of work on capital structure and corporate structure last year, and we continued into the first quarter of this year. We did a successful hybrid bond exchange, issued new hybrids, issued several senior unsecured bonds and repaid expensive bonds and bank debt. We also simplified our group by unwinding some joint ventures, including our JV in Poland with Sona Asset Management. Disposals are another highlight. We sold EUR 1.1 billion of properties last year, and we plan to sell another EUR 500 million to EUR 750 million this year. We used the proceeds to reduce gross debt by EUR 220 million, but we also invested in CapEx, development and acquisitions as part of our long-term strategy to generate higher returns and create value. Our net LTV was 49.5% at year-end, a slight decrease, but please keep in mind that we bought shares in Q1 of '26. In general, our goal is still to bring the LTV down this year and I expect we will make progress more towards the latter part of the year. More early bond repayments, tender offers, they're definitely part of our plans for 2026 and we are also looking very closely at our hybrid bonds, which are callable this summer. Like last year, we want to find a bondholder-friendly solution, which respects the important contribution of hybrid bondholders to our growth. Finally, our interest coverage ratio at 2.2x is still lower than we want and probably lower than the rating agencies want and we all agree it's very difficult to improve the ratio when we're selling income-generating assets. So our focus is very much towards shifting towards sales of nonincome generating assets this year and also towards investments that generate high returns and improve the quality of our portfolio. We still have plenty of work to do on leverage, ICR and simplifying our corporate structure. With liquidity of EUR 1.5 billion, which includes our recently upsized EUR 450 million revolving credit facility with Citibank as a new lender, with that EUR 1.5 billion of liquidity and limited bond maturities in the coming years, I believe we have some breathing space to execute on all of these priorities. So now let me turn the floor over to Pavel to discuss our key figures. Pavel?

Thank you, David, and good morning to all of you on the webcast. Moving to Page 5, where you can see our key figures for 2025. Our property portfolio stands at EUR 18 billion. It means a decline of about EUR 250 million as we sold properties for EUR 1.1 billion, but also made investments in CapEx, development and acquisitions. We also had a positive valuation result for the first time since 2022, with values rising about 1%. Our LTV declined to 49.5% moving in the right direction and below the peak of 52.3% at the end of 2023. Contracted gross rents were EUR 906 million at year-end, which is a decline from EUR 917 million at year-end 2024, but an increase from EUR 898 million at H1 2025. That said, overall income figures are lower with EBITDA of EUR 703 million and FFO of EUR 275 million. The decline in EBITDA and FFO is due to our sizable disposals and the time required until investments start to generate income or sales proceeds. Operational performance remains very healthy with our occupancy increasing by over 1 percentage point to 93% for the first time since 2022. Our like-for-like rental growth was at 3.1%, above indexation, reflecting our continued ability to capture positive rent reversion. Our net ICR stood at 2.2x, which as David mentioned, is below our target. We have a clear strategy for how to regularly improve it again. While CPIPG has been very successful with disposals, we have sold EUR 4.5 billion of real estate since 2022. Our focus is shifting to selling more nonyielding assets with proceeds used to repay high-cost bonds and bank loans. Our disposals in 2026 and '27 are expected to come from land bank, residential development and some income-generating properties that are either mature, noncore or where someone offers at a price that is simply too good to reuse. On top of our disposals, cost remains a clear focus with operations optimized wherever possible. For example, we reduced our administrative costs by about 5% and recently internalized asset management in [indiscernible], which should lead to savings in the low millions of euro. Finally, we continue to focus on development, which appeal and scales to our existing platforms. For example, small-scale hotel development in Hungary or retail parts in Croatia. With these types of developments, which achieved an average yield on cost of at least 7% to 8%, well above our current portfolio average. I am confident that all these strategies to tackle the ICR will eventually get the job done, but I do request some patience because it will take time to translate into our results. On the next page, Page 6, you can see an overview of our portfolio. There hasn't been a major change, but there has been regional movements. Retail continues to grow to complete small-scale retail park developments. On the other hand, the share of offices have declined as we sell noncore smaller offices. The share over declined due to sales of large hotels in Croatia, Hungary and Austria, while we completed some small-scale development in Budapest and most recently in Bernau, Czech Republic. Now moving to Page 8. As already mentioned, occupancy increase with positive results in all segments, including offices. Our rental income declined due to the disposal while the average portfolio yield, which we define as prop-up net initial yield increased slightly to 5.7%. I will stop here for a moment and ask David to say a few words about our financing activity. David?

Thank you, Pavel. On Page 9, 2025 was another busy year for financing. We raised about EUR 1.4 billion of new debt split between bonds and loans and we repaid more than EUR 1.6 billion of bonds and loans. Our recent bond issues, whether in euros or Sterling, have been very well received. We are also proud of the successful hybrid exchange that we completed last summer, converting old style, euro and Singapore dollar hybrids into our new Type A euro hybrid structure. We followed that transaction with a new Type A hybrid in Sterling that was used to unwind our joint venture in Poland. Through tender offers and make-whole calls, we repaid a lot of short-term debt and now our liquidity of EUR 1.5 billion covers all our debt maturities through Q3 of 2027. This is a pretty conservative way of looking at things, by the way, because we also have substantial secured loan maturities, which are covered in that equation, and we have faced no difficulties rolling over bank loans. In fact, it's quite the opposite. Our banks are actually competing heavily for bank loans. And I hear from Marqeta nearly every day that the competition is fierce. Our average cost of debt was basically unchanged, which is a nice achievement considering that legacy bank loans from 4 to 5 years ago as they were rolled over were being priced against higher base rates. I expect CPIPG to remain proactive in refinancing upcoming maturities early through tenders and open market repurchases of bonds, Certainly, with how our bonds are trading today, the buybacks look more attractive, and we are glad we issued bonds when we did. Finally, I'm sure our bond investors want to know about our hybrid, which is callable in August of 2026 and which resets in November 2026. As I mentioned earlier, we're very focused on the bondholder-friendly solution. We're discussing options with our banks. We have a lot of smart banks. And I would just say we are working on it. We care about it, but it's still a bit early, so I'd expect that we will keep in touch with you, and you'll hear more from us about this in the coming months ahead. So those are the financing highlights. Now I can turn it over to Michal to spend a minute on disposals. Michal?

Thank you, David. I follow up on Page 10. Last year, we saw an improvement in transaction activity with a return of larger deals over EUR 100 million. Local money still continues to drive the market. We saw very good demand from local funds, family offices and private individuals. We also saw the interest of larger institutional buyers from London and outside of CEE region for the first time in a few years. We completed EUR 1.1 billion of disposals during 2025 which was above EUR 1 billion target. The largest part of this amount is created by sales in hotel segment of about EUR 270 million and office with about EUR 260 million of divestments. On average, our disposals were completed slightly above their book value. Altogether, we sold more than 80 properties in about 45 transactions over the year. The most significant deals included sale of a 50% stake in our Bubny land bank in Prague as well as the sale of Marriott Hotels in Budapest and Vienna. As you can see from the chart on the right-hand side, we sold assets across all the countries in our portfolio and across all the segments. For divestment, we selected those assets which sales should strengthen the profitability of the remaining portfolio in the future. Mostly these are assets which would require substantial CapEx or big costs. As we already mentioned, CPIPG is confident that we reach or exceed our initial target of EUR 500 million disposal in 2026. We trust the final result would be between EUR 500 million and EUR 750 million. So far, we do not see any significant impact in transaction caused by the conflict in the Middle East but we are closely watching its impact on financial markets and buyers perception. In terms of the progress so far in 2026, I will ask my colleague, Kveta, to comment. Kveta?

Yes. Thank you, Michal. First quarter of 2026, saw modest progress on disposals with EUR 72 million in closed or signed transactions. This relates mainly to land banks in Croatia and Hungary and office building in the Czech Republic and small office in Italy. That said, I am confident that second quarter of 2020. will see higher activity as we are closely in 2 large disposals of over EUR 100 million each and are in active discussions on several large projects on many small other projects. The overall pipeline of potential disposal is large at more than EUR 2 billion, which gives us flexibility to choose the right opportunities and maximize prices. So between Michal and myself, this remains a big focus. Now let me turn the floor back to Pavel. Pavel?

Thank you, Kveta. Now I'm on Page 11. We have covered most of the high-level points so now we can discuss the operations in more detail. Our net business income declined by 7.2% due to disposals, which reduced both rental and hotel income while our EBITDA declined by 5.8% as we reduced our administrative costs by 5%. Cost reduction is still a big focus for 2026. FFO declined mainly due to the decline in the rental and net hotel income as a result of our sizable disposal. As I already mentioned, our plan is to support the ICR through asset rotation, investment and capital structure actions. The plans all have a timeline before they will be visible in the figures. And we believe that our FFO can improve from 2027 onwards. Net profit turned positive, and as a result, the equity and NRV increased for the period. We reduced gross debt by EUR 220 million during 2025, and our net LTV slightly declined. A portion of secured debt relative to the total debt increased by 1% due to bond repayments, while overall secured leverage remains moderate at about 24%. In total, 52% of our debt is unsecured, and we want to keep out to the between unsecured and secured. The asset coverage for unsecured creditors remains high. with unencumbered assets to unsecured debt at 183%. Now I will turn the floor back to David to discuss more about the real estate portfolio. David?

Thanks again, Pavel. I'm now on Page 14, starting with offices. As most of you know, we continue to believe in Capital City offices in the CEE region, where limited supply continues to favor existing landlords. Overall, office occupancy improved in 2025 as our local teams worked with tenants got creative and in some cases, found alternative uses and new tenant categories. Prague, Warsaw and Vienna have high occupancy levels in the mid-90s. We saw particularly strong performance in Vienna with occupancy rising from 90% to 94% and in Warsaw, which reached a new record of 96.5%. On Page 15, net rental income in the Office segment declined because we sold 16 office properties last year. Like-for-like rental growth was positive, over 2%. On average, our portfolio is under-rented about 10% below achievable market rents according to outside experts. On Page 16, I will speak about our largest office portfolio in Berlin. While the German economic recovery is slow, we still believe Berlin is the right place to be. Startup funding in Germany increased by over 20% last year, and Berlin remains the #1 city for startups in Germany. Still, the market in Berlin remains challenging. Office vacancy rose to 8.1% for the whole market which is quite a bit higher than 2% or slightly below 2% that we saw pre-COVID. On the other hand, it's still quite low compared to many other major cities. The good news is, our portfolio is going against the market trends. Occupancy in our Berlin portfolio increased by 1.5% and leasing volume increased by 75% in our portfolio compared to a drop of 19% in the overall market. I believe a few factors are driving this outperformance. First, as you can see on Page 17, the average rent in our portfolio is EUR 11.64 per square meter compared to the Berlin average of more than EUR 25 per square meter. Second, our space is flexible considering the type of structures we own, many of which are former factories that were long ago refurbished into offices, but with very flexible floor plans. We are able to subdivide our properties into small units quite easily, such as 1,000 square meters or less, which has been a strong segment of the market for leasing. Plus, we're looking at alternative uses. For instance, we are right now implementing a commercial living concept with Lime Home. We have a Pilates studio, a bouldering gym, and we're discussing other alternative uses such as schools. Finally, we expect to complete 2 small office developments during 2026 in Berlin, with one already fully leased and another in progress. The portfolio size is also slightly increased as we completed a small acquisition at the end of 2025. Moving on to Warsaw on Page 19. As I mentioned earlier, occupancy in Warsaw increased to 96.5%, well above the market, which is around 88%, reflecting the central locations of our assets attractive price points and the outstanding job our local team is doing. Like Berlin, we're seeing similar success in leasing smaller-sized units and we're being creative with uses, for instance, turning the employee canteen vacated by Google into a restaurant in Warsaw Financial Center. The portfolio size declined during 2025 as we sold some of our oldest and smallest assets to developers for potential conversion to residential in line with the market trend of stock being taken out of the market. Moving to Page 22, Prague. Overall market vacancy in Prague, as I mentioned earlier, declined to 5.9%, the lowest level since sort of pre-COVID with new supply at record lows. Our portfolio has a high occupancy rate of 95% with only a few minor spaces remaining. I should highlight that despite disposals of 2 offices in Prague last year, our net rental income increased by 2.4%, driven by higher net service income because of our energy business, which produces and sells green energy directly to our tenants. This allows us to provide tenants with attractive pricing for energy as well as fulfilling our environmental commitments. On Page 25, Budapest. Our team increased occupancy by 2% as we lease up vacant space and as eight tenants who were expected to leave the portfolio stayed in place with many even extending their leases. As a result, net rental income increased by EUR 5 million to EUR 51 million. Like Warsaw and Prague, we sold 3 of our oldest assets to optimize the portfolio. Finally, our recently introduced CPI Club offering with extensive services and ready-to-use flexible office solutions, car sharing and other benefits, CPI Club has been very well received by tenants. We have also been able to convert flexible office leases into long-term leases, demonstrating the benefits of our product and service offerings. The last market I will cover is Bucharest on Page 27. The Bucharest office market saw no new completions during 2025, which is quite positive for landlords. Our portfolio occupancy is at 90%, which we hope to improve in 2026 as we have several promising leasing discussions going on right now. Like-for-like rents grew 2.4% and the weighted average lease term is more than 5 years, reflecting the long-term leases we signed with hospitals and clinics last year, which, by the way, is another example of creative leasing. Absolute net rental income declined partially because we sold 1 office property in Bucharest last year. Now let's switch gears to retail on Page 29. We CPIPG is one of the largest retail landlords in Central and Eastern Europe. Retail parks are about half of our retail segment, plus we have regional shopping centers and other small retail formats such as grocery stores. Our retail segment has performed well in recent years, with occupancy now at 98%, which is effectively fully occupied. Absolute rents and like-for-like rents increased despite the disposal of a few noncore retail assets. On the other hand, we added retail parks in Croatia and Serbia through developments and acquisitions expanding our existing network in both countries. This network effect is something we really believe in. Our scale and experience makes CPIPG a preferred landlord for retailers. For example, we recently signed a lease with CCC and Action in Croatia, each from multiple locations, while Woolworth entered the market in the Czech Republic and Slovakia across multiple locations in our network. Looking at shopping centers on Page 31. Our portfolio is focused on regional shopping centers covering people's daily needs. Most of our shopping centers are located in the Czech Republic, Romania, Poland and Hungary. Our shopping centers continue to perform very well with like-for-like tenant sales increasing by 2.6%. The affordability ratio, which is a tenant's cost for rent, services and marketing divided by sales, -- the affordability ratio is 9.5%, which is very healthy and supports rental growth in good times while protecting our tenants when things get tough. I'll quickly discuss residential on Page 36. Residential assets are about 7% of our portfolio with close to 80% located in the Czech Republic. Over the last few years, we've sold German and Austrian residential assets that we originally acquired with the S IMMO portfolio, hence, the declining net rental income. We expect to continue to sell assets in noncore locations such as the U.K. On the other hand, we continue to invest in our Czech portfolio, and that's one of the reasons you see like-for-like rental growth of 10.4%. Now I'll pause for a moment, so Mindee can talk about hotels. Mindee?

Thank you, David. Moving on to Page 39, CPIPG owns and operates one of the largest platforms of hotels in the CEE region, primarily in Congress and convention hotels in capital cities. The sector has recovered well since COVID with operational performance continuing to improve. Growth in visitors to Central and Eastern Europe continues to outpace the broader European average, which is also encouraging more investment activity. On Page 40, you can see some of our hotel brands and the summary of the portfolio. Some of our hotels are owned and operated by CPIPG and some are owned and operated through our joint venture with Best Hotel Properties. In general, we feel CPIPG has a big advantage as an owner operator in our region. And we have been strategically disposing of hotels where we are not the manager, such as the Vienna Marriott Hotel and the Budapest Marriott Hotel. In contrast, we opened two Mamaison hotels in Budapest last year, which have been very successful and recently opened a Clarion Congress hotel in Bernau. On Page 41, net hotel income of our portfolio declined to EUR 43 million which is due to the loss of income from disposals, particularly the results in Croatia and the two Marriotts I already mentioned. Still, the portfolio continues to perform well. Occupancy grew year-on-year by 2 percentage points. And while the full year occupancy is still shy of the 2019 level, we saw that occupancy in the fourth quarter of 2025 actually surpassed that of 2019. Average daily rates or ADR also grew year-on-year, resulting in a RevPAR growth of 7%. This was largely driven by a strong recovery in corporate demand. We are also pleasantly surprised with the performance of our new hotel openings, delivering better-than-expected results despite being in a ramp-up phase. Gross operating profit margins remained stable, averaging at about 35%, showcasing our advantage as owner operator to maintain profitability. I will introduce the complementary asset segment on Page 42, by mentioning that land has always been part of our group's DNA. We have a long history of buying land cheaply, holding it and selling it over time. Last year, we sold 50% of our Bubny land plot in Prague after nearly 2 decades, crystallizing the valuation gain. In total, since 2022, we have sold more than EUR 400 million of land bank in Romania, Germany and the Czech Republic, and you will continue to see land sales in 2026. We have also been selectively undertaking development of projects, utilizing our land banks, and these are for developments either to sell or to hold. Now let me turn the floor back over to David to discuss some more specifics on our projects and recent investments in this segment.

Thank you, Mindee. I'm now on Page 43. In the coming years, I believe you will hear a lot more from us about residential development. We intend to gradually develop our land bank into residential, both in the Czech Republic and Italy that can be sold for a very nice profit. The returns are well into the double digits. For instance, in the Czech Republic, we're talking about profits of 30% to 40%. In Prague, we still have several projects ongoing. As most of you know, demand for modern residential assets in Prague is huge. It may sound old fashioned to some of you, but the Czech mentality is still very focused around owning bricks. Recent surveys have demonstrated that Czech people trust investments in real estate above all other asset classes. Still, we are not a speculator, all of our residential projects have a high level of presales before we begin any construction. In fact, our projects in the Czech Republic are about 70% presold. These units will be mostly completed in 2027 and are expected to generate sales proceeds of more than EUR 350 million. We plan to continue gradually selling our residential assets in the U.K. and are also very focused on completing and selling our residential developments in Dubai. Between these 2 segments, the sales could be more than EUR 600 million over the next few years. Speaking about Dubai for a moment, considering the conflict in the Middle East, we get a lot of questions about what we're seeing on the ground. We invested in Dubai because we believe the Emirates has emerged as one of the world's important global hubs for business and tourism. And so far, we have seen no evidence that this will change long term. Full-time residents of Dubai are staying and frankly, the UAE government has done a wonderful job protecting people and communicating throughout the conflict. Real estate transactions continue to happen. We speak to the brokers, banks and valuers regularly. And for now, it's simply too soon to tell how the region will be affected. Of course, it's all about the duration of the conflict. The one thing we can say is there are no panic sellers and CPIPG, we continue to believe in Dubai. At the moment, we have 19 properties, 15 of which are still under construction, 4 are finished, of which one is rented at a very nice yield. Our plan is to continue focusing on sales, but I will admit it's likely to be slow until after the summer. As we've mentioned, we also developed to hold such as expanding our network of retail parks in Croatia and Serbia. These developments have brought us a yield of cost of around 8% -- 7% to 8%. We've developed hotels, we mentioned Budapest several times and some small offices in Berlin. In total, our developments to hold should bring EUR 35 million of rental income over time. I'll speak briefly about land bank on Page 44. Here, you see the photo of our Prague-Bubny site once again. We already mentioned the sale of 50% last year. At the moment, we're still waiting for the master plan to be approved by the city of Prague. In our view, the joint venture that we signed was necessary because of the scale of the development, once the master plan is approved, is going to be huge far larger than what we typically take on as a group. Finally, spending a moment on Italy on Page 45. We see Rome as a new frontier, a long-term investment that can generate excellent returns. Over the past 5 years, CPIPG has acquired land plot around Rome, mostly in the south of Rome, but also in the North located inside the Altostrata A90 Ring Road or just outside the ring road with excellent transport links. Residential supply is heavily constrained in Rome, with extensive heritage protections in the city center and a very tough permitting process. Rome's population is growing, particularly among 20 to 34 year olds, and the housing stock is just old, mostly 1970s vintage energy inefficient with poor layouts. The existing housing stock in Rome is generally valued at around EUR 3,000 to EUR 3,500 per square meter, which is really about half of what you see in Milan or even in Prague. So overall, we see Italy as a long-term development opportunity that will be realized or sold gradually over the next decade or so. Now let me turn the floor over to Moritz to discuss capital structure and ratings. Moritz?

Thank you, David. I'm now on Page 52. Just to quickly reiterate a few points. We have a total liquidity of EUR 1.5 billion, which cover all debt maturities until Q3 '27. We don't have any major near-term bond maturities. The only maturity are legacy S IMMO bond for EUR 150 million due in May this year and the small show shine of EUR 36 million, which comes due later this month. Bond maturities in '27 are mainly related to the remaining step of our April '27 bond with EUR 132 million and the CPI Euro October '27 bonds for EUR 74 million. Wherever possible, we have repaid our bonds early, sometimes with cash and sometimes with new bonds issues when the pricing is attractive. In general, we are looking at everything in the context of the ICR and leverage. As most of you know, the ICR is the one metric that will require more work, and we know our rating agencies are watching closely. Moody's reviewed our rating last December to result in negative outlook that was outstanding since July '24. Ultimately, Moody's decided to downgrade us because it will take us time to improve the ICR beyond the typical outlook period of 12 to 18 months. We really see the sale of residential developments or development assets for sale in '27 as critical to achieve a better ICR. A positive outcome from the Moody's was the highlighted that our business profile, operating performance and liquidity a higher rating and that we're progressing on deleveraging. So for S&P, we basically access pretty much the similar discussion. And over the near term, their negative outlook has been outstanding since May '24. So I think a review in the very near term slightly, please. And finally, let me touch on the group structure on Page 57. Over the last few years, we have made a lot of progress with the combination of our asset management teams and the squeeze out and delisting of S IMMO. During '25, we unwound our joint venture with Sona, as David mentioned, and the small joint venture in Berlin. This year, we announced a voluntary offer for the remaining shares of NEXT in Italy with Next being a small company and that the listing offer is expected to cost us between EUR 13 million and EUR 14 million, but it would basically help us a lot to reduce cost complication and of maintaining a listed company in Italy. Finally, we're continuing to analyze our options on how to further integrate CPI Europe and plan to make further progress during '26. Personally, I believe reducing complexity is one of the most important things we can do. Finally, Petra, do you want to spend a few minutes on ESG before we get to the Q&A.

Thank you, Moritz. This is Petra Hajna. I am the Group Sustainability Officer, and I would like to walk you through the ESG section beginning on Page 65. CPIPG strives to improve our ESG reporting each year. 2025 was the second year of reporting in accordance business Corporate Sustainability Reporting directive and the European sustainability reporting standards. Our sustainability statement, including economic, limited assurance by our auditor EVA. Additionally, the environmental part of the report was verified by CIQ, a regional partner for reporting as compliance with ISO and TT protocol and both awarded the CR2 confirmative certificate. Another important achievement was the CDP climate change score of A-minus which reflects our strong governance, transparency and the implementation of best practices in climate management. Touching briefly on governance, Page 66. Just to remind you that we have several members of our Board of Directors, of which are independent. We face regular examination from many third parties and outlook compliance of its is continuously enhancing our compliance training and systems using policies that are regularly reviewed and updated. Moving on to Page 83. This is the big picture of our ESG strategies. CPIPG is focused on 5 clearly defined goals this environment, social and for governance polls. The environmental pillar focuses primarily on reducing greenhouse business emission intensity, improving energy efficiency increasing the share of 5 buildings and waste recycling. Wide social pillar target green leases, employee training and satisfaction surveys and gender diversity in senior management. The governance pillar is answered in a group 5 photoconductor suppliers and mandatory annual employee training on the code of conduct and associated policies. In a nutshell, all ESG targets were met in 2025. Let's now take a closer look at the individual ESG section. Starting with the environmental part on Page 95. The group adopted more stringent environmental targets, which were validated by the science based targets initiated in 2025. The charges are now aligned with the 1.5-degree scenario for and well below 2-degree scenario for scope 3 emissions. All of our climate targets were significantly outperformed in 2025, mainly due to the transition to renewable electricity, operational efficiency measures and engagement. The share of green-certified buildings continue to grow in 2025, 50.3% of the portfolio by property value and 42.1% by GLA versus, a year-on-year increase in both metrics. The vast majority of the assets achieved a very quick or higher are gold or higher. Green lease agreements remain a key engagement tool with our. By the end of 2025, green leases covered 22% of total GLA and the group continued to offer green leases for all new commercial leases and renewals. Finally, just a brief word on social aspects on Page 107. As of the end of 2025, the group employed 2,138 employees with a distribution of 46% male and 54% female. Employees in the top management represented 2.1% of the total workforce, will remain holding 40% of the all top management position. This figure exceeds the goal of drilling at least 33% of senior management position with. Looking around the room today, we have exactly 40% of women in the room, so I would say we are on the right track. I could go on for longer, but I believe this covers the important points. David, please over to you. Thank you.

Thank you, Petra. Okay. So let's start getting to the Q&A, and we are working through just compiling the so maybe give us a second. So Mortiz, do you want to -- do you want to start with the first one?

Yes, sure. Could you please provide an update on the Berlin office portfolio? Specifically, it seems that there is some pressure on occupancy at Grasberg. Is this the case? Was there any improvement in rental rates in Grasberg? Can you provide an update on negotiations on Berlin Technical University? So I will try to answer that directly. So if you look at our 3 clusters in the Berlin portfolio, so we've got what we call Rest West, which is in the middle and Central and the eco-part which are a bit outside and then Grasberg. And Grossberg is really, I would say, the most challenging cluster within the portfolio simply because it was very well suited to the IT and creative industry, and you just see less leasing activity than before COVID. And so this is still the cluster where we need to do some work. We're looking at alternative leasing strategies that were with the commercial living provider in discussion to add another 1 after the first one we implemented. We're also discussing with two and other potential tenants. So we're actively working on it, but it is still the most challenging cluster. And regarding the technical university, I haven't got the latest update about it, but I think we're still in negotiation and lease was still running for some time. So for people who aren't aware of it, like the technical university is a long-term tenant with a very low historic lease and there will be soon a rent reversion or rent revision or lease negotiation coming up. And so there's high potential to increase the rent, but it's still ongoing. And I would also expect -- I need to check with the team. But keep in mind that in September, there are the local elections in Berlin, so new Senate. So I don't expect any decision before a new state government is elected since ultimately, they approve the budget for the university. Okay. And the next question, okay, those are several questions. By when does management expect to get the short-term rating stable from current S&P negative outlook and improved BICR, given the left under this maintenance compartment? Do we see this metric go below 2x levels in the first half of this year since the operational improvements are expected later this year? Also, what are your views on the office and residential real estate market across the, especially in Czech, Germany and Poland? Do we see the occupancy rates further improving in this region? Also please provide some color on the rental upside in Berlin.

So I can start with this. I mean I'll start with the second part of the question first. I mean, I think we've kind of now -- I think the question was populated in the webcast kind of early on. So hopefully, you feel that we have covered the office markets across CEE quite well. Do we see the potential for occupancy rates to increase further? Yes, I'd say across CEE, but you can already see we're at a very high level and as a landlord that has a lot of properties and multi-tenanted buildings, actually, we like to keep some vacant space because it allows for flexibility in meeting tenant needs. So I'd say we're in a pretty good position now across CEE. The one CEE market where we are hoping for some improvement this year is Bucharest where as I mentioned, the occupancy is around 90%, and I do think there's potential you could see it increase. But we're not particularly concerned at all about supply factors, and it seems like the office demand pretty strong. Berlin, we've covered Moritz mentioned it in the last question. Again, I think we've always believed that our office portfolio in Berlin would respond differently than other office portfolios in more challenging economic environments because of the price point, which is still about half of the Berlin average and also because of the flexibility of the space that we have. So in general, I think we feel there's still a good potential for improvement in Berlin. But there is also the possibility that you will see quarter-to-quarter fluctuations in Berlin as well. Residential markets we've talked about. Again, I think the resi market in the Czech Republic remains extremely strong. We also see a lot of opportunity in Rome as I described. So we still see lots of good potential. When it comes to the ratings and sort of how we see the outlook stabilizing, the reality is that S&P has had us on negative outlook for a long time. We are in close discussion with them around the ratings, and we'll have to see what the outcome is. At the end of the day, our goal is to achieve stable and to go forward from there. You mentioned in your question, the tight headroom under maintenance covenants. I'm not sure we see it exactly the same way. In fact, we think we still have quite a bit of covenant headroom. Do you want to maybe give some of the figures in the calculation, Moritz?

Yes. I mean we still have the right EBITDA. So the covenant headroom is basically still 17%. And this would translate basically EBITDA would need to decline with more than EUR 100 million. I think we don't see that at the moment. So -- and we're pretty -- as David elaborated earlier, as soon as we complete the development we think there will be a lot of fat reduction, which should help the ratio.

So we understand that our bondholders have been kind of bearing with us for a long time now as the capital structure transitions, and we are still in that process, but we are really strong believers that the game-changing year is going to be 2027. That's when a lot of these residential developments are finished. That's when we'll be selling them. They don't generate income. That, combined with the activities that we're going to take this year around sales around corporate simplification and other things that we can do, we really see a good potential for an upswing in our ratios really from 2027 onwards. I still see 2026 very much as a year in transition. Should we move on to the next question?

The next question. Are you planning for higher rates as a result of the conflict in the Middle East? Any options to mitigate?

Well, frankly, the best option to mitigate is to have done bond deals when we did. And so for the moment, we feel really, really comfortable about where we are. Some of the good pieces of information are we don't really have very much floating rate debt at all. So if you start to see short-term rates increase, that's really not going to have a significant impact on us. The vast majority of our debt is fixed. We also don't have significant bond maturities in the coming years because we issued when we did. I think the risk, of course, is that as higher rates, either whether it's base rates or longer-term rates as we roll over the bank financing that will translate into the ICR. But luckily, we have really done an excellent job of working on the margins, on the bank financing. And so it's definitely not a one-for-one increase because we've seen the margins come in as well even though the base rates are slightly higher. And then the last thing I'd say is the market seems to have gotten super excited about the idea of the ECB raising rates. But this is a supply driven issue, not a demand-driven issue that you're seeing in the Middle East. And I do wonder myself how much central banks raising rates is really going to have any impact on the situation at all. So -- and I think some of the shifts in thinking might be more towards more economic weakness and the like. So I'm just -- I'm not sure that the market is right on the path of rates. But I would say as a group, we are very well prepared. We have fixed rate debt, and we're ready for it.

And the next question, could you provide an update on the global work structure? Could there be an unwind of the structure? Is there any discussion with Around Town to change the structure? What are the options in this regard?

See there's no meaningful updates to share. What I can say is we are really happy with how the Global Worth team is running the portfolio, it's very stable. They've managed their liquidity well. They've managed their ratings well. So I'd say there's no pressure on us to do anything with Global. It can simply continue running as it is, and we think they're doing a good job. Now we've told many of you over a long period of time that this kind of 3-way marriage between us and Around Town and Growthpoint is something that we would eventually want to resolve. We're studying ways to do that, but there's really no immediate pressure and no resolution on it yet. But again, we think the management team has done a good job.

Got you. And next question. Can you explain why despite this EUR 1.1 billion disposals, cash flow from investing was negative. This is even before factoring EUR 333 million outflow in cash flow from financing for acquisitions of noncontrolling interest, which I assume is the payment and the quarter '26 buyback outlook. How do you see your cash flow developing in full year '26? What do you expect net disposals, cash inflows to be from EUR 500 million to the EUR 750 million disposal type? I maybe start. So the cash flow includes the net disposal proceeds, so some of the bank debt was transferred to the buyer and -- so you don't see the full amount. And then the net proceeds the buyback of the EUR 333 million is the unwind of the Sona -- Sona JV, which was basically financed with the Sterling hybrid we issued in October last year. And I think going forward, 2026, it was totally that we spent on development. Cash and investments were we expect the proceeds to be collected in 27 and 28, mostly.

Do you want to add anything, Pavel?

Maybe I just don't want to repeat, Moritz, but what I wanted to say is that like EUR 1.1 billion of disposals, it doesn't mean, unfortunately, EUR 1.1 billion of net proceeds there because in almost all transactions you have some kind of deductions like DTL, working capital adjustment, et cetera, et cetera, plus there were a couple of transactions where we have -- we have a deferred payment, meaning that you can see the net proceeds in our '25 cash flow, but I can say that money is already with us. It came in Q1 this year. So it has also impact on our cash flow. Maybe our expectations, I think that given our plan to dispose primarily non-yielding or low-yielding assets and of course, non yielding assets, they are mainly unencumbered. I'm hoping that net proceeds from our '26 disposals will be like rather closer to the carrying amount of those assets being disposed.

Thank you, Pavel. And the next question, have you had any discussions with the rating agencies, specifically S&P? Do you think you can maintain the BB+ rating with S&P? I think we covered it. I quickly just recap. So I think S&P will review our rating given how long the outlook is outstanding and that we just published the latest set of figures. And I think it's similar to Moody's like a 50-50 chance, what is their take and what is their outlook horizon and how do you see the ICR evolving. And is it the key metrics and as we progress on other initiatives, as mentioned earlier or not. So it's really hard to tell, but yes. The next question. What development costs remain for the expected EUR 900 million development sales proceeds by '28? Will you hope that Dubai assets post completion or look to sell despite the currently depressed prices?

So I'll take this one. So when you referenced the EUR 900 million of sales proceeds between the residential assets in Prague, primarily in Dubai. So of that EUR 900 million, it's less than 1/3 that we still need to spend in terms of completion. It's worth pointing out, and that's, I'd say, roughly split between Prague and Dubai. I think it's important for you to know that in Prague, the developments are really financed by banks. In Dubai, we're still in discussion with the bank around financing some of the remaining construction payments. So that's kind of the story there. The base case scenario for Dubai is that we will dispose the assets once they're completed. Obviously, we're watching the market now, and we're waiting to see what happens. I would say that a great example of leasing is the fact that we leased one of our apartments in Dubai at about a 6.5% yield. And so we are open to leasing -- to renting the properties and leasing them if necessary. And if that's better than sales or tides us over for a period. But as I said earlier, I think it's still too early to have a view on how things are going to play out in Dubai. And if the conflict comes to a reasonable end soon, then hopefully, things will be a bit more back to normal in the fall.

The next question, I guess, is also for you, David. What options do you have for the '26 callable hybrid?

So I think most of you know the playbook really well of what we can do around the hybrid. If you had asked me in January or February before this recent market sell-off, I would have told you we would love to call them and issue a new one. Do it nice clean, call them simply issue a new bond, have a fantastic, well placed new issue. I think considering how things are trading now, clearly, we're looking more back in the camp of doing some kind of exchange offer. I think most of you will remember the exchange offer from last summer where we really tried to offer bondholders a package that was attractive and which I think reflected our sort of feeling around the importance of the hybrid market to us and our desire to maintain a really good relationship with our hybrid investors. So again, as I mentioned in my little talk earlier, the banks have been showing us ideas. We have lots of smart banks. And so we're just simply evaluating the options. What I would say is we are still highly motivated, a, to do the right thing; and, b, to continue replacing our hybrids with the new style hybrids, so that we have consistency. We don't have two classes of hybrids and because it does give us some equity credit at Moody's.

Thank you, David. The next question, how do you balance your development appetite with your deleveraging efforts?

Well, at the end of the day, how do we balance deleveraging and development, the -- I think the issue that we have found is that over the last couple of years, if you look at '22 to '24, we were making sales of assets almost as a replacement for liquidity to some extent. We had a big bridge financing outstanding. The bond markets were closed for a couple of years. And those sales, even though, frankly, the sales that we made were things that we always intended to sell when we bought IMMOFINANZ and S IMMO. Even so, those disposals had a negative effect on our rental income. And I think we have found it's very difficult to budge the ICR when you're selling -- when you're selling income-generating assets. So part of the idea of this kind of gradual shift to development is that we can generate returns that are well into the double digits. And so I would just say when it comes to development, I think what you'll see is that we're taking it slow. So when you talk about the balance, we're still very much focused on reducing leverage. And when it comes to development, we're going to take it slow. We're very focused on -- for things that are development for sale like residential, having a high degree of presales. So I'd say conservatively, slowly, but we think it's really -- like from just a pure math perspective, it's really necessary for us to do both things at the same time. We need to sell low-yielding and nonyielding assets. Those are great for repaying debt, and we need to try and generate a bit more returns through some of our investments. And we think attacking the ICR from both of those perspectives will eventually get us to the right place.

Thank you, David. And the next question, what is the current book value of the development properties in Dubai? Are there any other assets in the UAE? If yes, what is the total value? Is there any local construction financing against any of these properties?

So the book value of our properties in Dubai at the end of the year was about EUR 330 million. It was basically more or less unchanged year-over-year. That's 2% of our property portfolio. by the way. So it's a fairly small segment. We have 19 assets, of which 4 are completed. The rest are under construction. We don't have any other assets in Dubai and frankly, at this moment, no plans to do anything else in Dubai. We're very much focused on completing these properties and selling them. We have been in discussions for some time now with a local bank about financing some of the remaining construction payments. That's something that is -- continues to be discussed and then I'm hopeful about, but that's more or less the story.

And the next question. Thank you for the presentation. Can you spend a few words on development of valuation yields? What happened in '25 and what you expect in '26, '27? Also in connection with the change of interest rates. Should I start?

Yes, go ahead,.Moritz.

So basically, you will find more towards the end in the financial statements of our management , you find the sensitivity analysis for the different segments as yields are changing. And I would just note, it's very hypothetically right, ultimately, independent appraisers they take their view and they not only look at the yield, they look a bit more dynamic, how it's moving. So not every interest rate movement is going to one reflected in the valuation. There are also several methodologies other than the DCF, so use comparable transactions or income capitalization, and yes, and so valuers ultimately decide on those, but you'll find the details in the management report. The next question. How much like-for-like rental income do you expect in '26? How much rental income do you expect in '26 from development carried out in the prior year?

Pavel, do you want to take it?

Sure. I will take it. So we expect our like-for-like for upcoming year, actually for this year in the low single digit which is typical inflation. We are expecting some positive rent revisions. So I would say, like between 2%, 3%, similar to what we reported for 2025. And of course, we are expecting a positive -- contribution of positive development coming from our completed development projects mainly in Croatia and Servia. Plus of course, we also expect additional contribution from recently completed development projects in Berlin in our GMG portfolio.

Okay. Thank you, Pavel. I think with that, we don't have any more questions.

So I would just -- with that, if there's no more questions, I would just thank all of you for joining the call. I know the last couple of weeks have been rough for our bondholders. Please rest assured we are watching the prices of our bonds every single day, and we are much happier when the prices are going up than when they are going down and we certainly intend to take actions that are supportive for our credit over the course of this year. But hopefully, you understand that we continue to see our metrics in transition we're taking some good steps and we have, I think, some very good prospects and a very good performing real estate portfolio. So really, again, thank you very much for all the support, and you all know how to find us if you want to ask more questions. So thank you very much, and have a great rest of your day.