Readcrest Capital AG ($EXJ0)

Ladies and gentlemen, we warmly welcome you to the Full Year 2025 and Outlook Full Year 2026 of the Readcrest Capital AG. Please note that this call is being recorded. I'm pleased to welcome the CEO, Rolf Elgeti, who will guide us through the presentation followed by a Q&A session via audio line and chat. And with that, I'm handing over to you, Mr. Elgeti.

Thank you very much for the kind introduction. Thank you, everyone, for your time and interest in Readcrest Capital. So this is our call to present our full year 2025 figures. A presentation has been uploaded this morning on our website. And I will just highlight 4 or 5 slides very quickly, I guess, for 10 minutes or so, and then we are open for Q&A afterwards. So with that, let me start with the overview of what we've achieved last year and what the key numbers are. Most importantly, last year, we achieved an adjusted EBITDA of EUR 10.1 million. That is from the continued businesses only. As you know, we sold parts of our U.K. business and the adjustment is to exclude positive one-offs. So otherwise, that would have been slightly higher. We had cash of about EUR 10.2 million by the end of last year. And last night, this morning, we published an outlook for this year of an adjusted EBITDA of EUR 8 million to EUR 9 million, which is basically the slightly higher U.K. quite cash flow-rich EBITDA, obviously, from our home care business, less the operational costs we anticipate for this year for our German development business, more about that later. We also guide for a run rate EBITDA by the end of this year of EUR 11 million to EUR 12 million, which is basically EUR 3 million higher, meaning that we expect the run rate to be EUR 3 million higher than the full year adjusted EBITDA for this year. What have been the key achievements since the end of last year? Three, mainly, firstly, we sold our U.K. health care business or the care-home business, slightly confusing because we still have the home care business. So we sold the care homes for EUR 44 million plus a deferred purchase price for later. We used this capital to repay debt and to allow the U.K. business to grow, but also, of course, to allow our German business to grow. We made major progress with our project development site in Dresden, where the pre-letting is now at about 50%, amongst others, to state-owned entities for 15-year lease. We have a 25-year lease with somebody else. So about 50% pre-letting. We have the planning in place, and we are currently working on the refinancing and the construction contract, and we hope to update you with this over the coming days or weeks and certainly start construction works very soon. And the other site where we've made major progress is Halle, where we managed to restructure the existing financing, and we will reposition this project as a condo sale project. So we -- rather than just building, letting and selling, we will sell individual apartments. We are refiling the building permit later this year for this, hopefully start sales this year as well as construction maybe beginning of next year. So I've started directly with an update, obviously, as usual for an earnings call. But just for those of you that aren't entirely clear what Readcrest Capital is about. Just a quick overview here on Page 3. So basically, we have a dual sort of strategy. On the one hand, we have a U.K. business, which is very cash flow rich and very stable businesses. So it's a home care business. And we, on the other hand, have German development projects, 5 in total, more details on that later, where we bought project development out of distressed situations recapitalizing them, reworking them, repositioning them to hopefully benefit from the very severe dysfunctionality of the German property development market that we see. I'm sure you're all aware of that, of the massive opportunity here in Germany as we have had not a lot of construction or new construction over the last couple of years. Obviously, many players in the space run into difficulties, and that leads to a very severe supply and demand imbalance with, in our opinion, huge option value. But of course, project development is a risky business. And that is why we decided when we set up this business to combine the strong optionality of the German project development business with existing and growing cash flows because, as you can imagine, it's rather comforting to know that every month, there's about EUR 1 million of cash flow coming in, which is, of course, not otherwise the case if you just have project development. Just briefly on our German portfolio. You can see that here on Page 5, we currently have 5 such projects. I don't want to run through them in more detail. There's more slides on them. I'm happy to ask any questions. But basically, we have -- as we announced quite recently, we acquired a big land just outside of Berlin behind the Tesla Gigafactory in Furstenwalde. And then we have the condo project in Halle, as I mentioned. We have the commercial project in Dresden, as I also alluded to. And then we have 2 where we are not as advanced yet. We have Magdeburg, where we're still working on replanning and repositioning this, and Schwerin, which is quite small, which will be social housing. On the following pages, I won't bore you with them. We have those projects in detail. And I'd like to jump directly to Page #16, where we give you some sort of key figures on those projects. You can see here. So basically, what we show you here is what we are, who we are, and what our key numbers are. So you can see that on the one hand, at the top, we have the U.K. business currently sort of EUR 11 million EBITDA. We hope to grow this to EUR 15 million as a run rate by the end of this year and with leverage of less than 2.5x. So that's net debt to EBITDA. That's what we mean with that. And you all can take a view of what you think that's worth. And then in the table below, we show you the 5 projects. We show you what we think the value could be, what possible construction costs are and what the project level financing is. And the idea is that this could help you to make up your sum of the parts valuation because obviously, it's very difficult for project developments. And as you know, some companies sort of present forward-looking valuation statements. We don't want to do that because who knows how the values will look like when one actually sells. And so -- but we still want to give you some guidance. So if I run through this, the way I would look at this is at the moment, well, Furstenwalde we haven't started yet. So I think we could leave that out for the time being. Halle is interesting because Halle, here, we anticipate to sell at about EUR 5,500 per square meters. That leads to a gross development value of just under EUR 140 million, and we are in negotiations with the construction company to construct at EUR 72 million. So that's obviously a very, very significant delta. And against that, we have only EUR 7 million of debt. So that's rather lucrative if we get all this together. In Dresden, the numbers are, we have about EUR 5.2 million of anticipated rent, of which, as I mentioned, half is already contracted. The other half is interestingly is we're seeing inbound requests for letting at higher rents than that. So the previously guided EUR 5.2 million may turn out to be conservative. That's not a surprise, obviously, because after so many years of no construction, in particular, prime product, even in the office market is short, and therefore, prices are going up. But even if we don't believe that extra upside. So we're looking at EUR 5.2 million of rent. Against that, we are currently negotiating with a construction company to build for EUR 52 million, i.e., more or less precisely 10x rent. That's obviously not unattractive at all. And against that, again, we have EUR 7 million of debt. So you can all think what that value is. Our value assess the GDV will be just over EUR 100 million. But I guess everybody can have his own view on that. And for Magdeburg, we don't provide any numbers because it's all under negotiation and ditto for Schwerin. And then we have holding company debt of just under EUR 35 million. Don't forget most of this is convertible bonds. And yes, so that's basically where we are. And I think I'll stop here. So that's precisely 10 minutes, as I mentioned. So happy to take any questions should there be any. Okay. I'm not offended if there's no questions, of course.

All right. No, we have not received any questions so far or risen hands. Not in the chat and not here from anyone.

That's cool. Obviously, the story is so clear that there's no questions, which I fully appreciate. So then I thank everybody for their time and their interest. If there are any follow-up questions, we are, of course, around with the team to answer them.

No, we have a risen hand as you speak. I will just ask to unmute by Mr. Kai Klose please feel free to speak. Mr. Klose, are you there? Can you hear us?

Kai Klose from Berenberg. One question. You mentioned the projected construction costs for Dresden on Page 18. Could you give an update how this comes from? I mean, it's a question, but given construction costs are rising, inflation was higher. Is this a number which is already contractually agreed? Or are there still some moving parts?

Yes. So thank you for your question, Kai. It's a very valid question. Obviously, construction costs went up, down and up again, given what we all know. The EUR 52 million we mentioned here is a number that we are negotiating with one contractor at the moment and hope to sign over the next days or weeks at worst. So it is hopefully an extremely precise forecast of what is going to happen. And let me also mention something that may be of relevance here, which is that usually, of course, given our experience and network, we would try to work with many different contractors and companies when we build something. But we don't do this here, in fact, at all. What we would do in Dresden and what we will do for all other projects very likely is to work with one single contractor with a very reputable contractor with also a very high credit rating because that's what everybody, tenants, potential tenants, potential buyers, financing parties will ask for. No one wants to take any risk of any small party defaulting here. So when we quote numbers and when we sign construction contracts with the contractor, it will be someone who kind of takes over all out of one hand and guarantees the timing and the cost. So a very long-winded way of saying the EUR 52 million here is a very concrete sort of negotiation result.

And maybe a quick one. How and when do you expect to increase the debt level at Dresden at an asset level? Is it before or with the start of construction?

It will be -- yes. No, it will be just after the construction. So the way this works is, obviously, we are working on financing for the construction. And of course, that will not be 100% of the construction cost. It will be slightly less. And then the way it works is we start building out of equity once we reach the level of the equity that our lender will want from us. Thereafter, the remaining sort of construction costs will be paid directly out of the debt facility. So the debt will grow sort of pro rata temporis with the construction progress.

Thank you very much, Mr. Klose. In the meantime, we have not received any risen hands or further questions via our chat box. [Operator Instructions]. But I guess everything was just fine and nobody seems to have questions. Well, I would say, therefore, we come to the end of today's earnings call. Thank you for your interest in Readcrest Capital. If you have any further questions at a later time, please feel free to contact Investor Relations. A big thank you also to you, Mr. Elgeti, for your presentation and your time. I wish you all a successful day, and I'm handing over once again for your closing remarks, Mr. Elgeti.

Thanks very much. Thanks for your interest and your time. Have a good start to the week.