Instone Real Estate Group Aktie

Ladies and gentlemen, welcome to the publication quarterly group statement as of March 31, 2026, Essen, Germany Conference Call. [Operator Instructions] And the conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Burkhard Sawazki, Head of IR and Capital Market Communications Strategy. Please go ahead.

Thank you. Good morning, everyone. Welcome to our Q1 '26 earnings call. Our CEO, Kruno Crepulja; and our CFO, David Dreyfus, will walk you through our presentation and give you an update on our current business performance and our outlook. As usual, this will be followed by a Q&A session.

With this, I would like to hand over directly to Kruno.

Hello, everyone, and thank you for joining our Q1 earnings call. Looking at the overall picture, I think it's fair to say that we have a solid start to the year. The first quarter is traditionally marked by weaker seasonality, and the conflict in the Middle East has certainly had a negative short-term impact, which should not come as a surprise. A key achievement was the good progress we made in institutional deals. This gives us confidence that the recovery in demand remains on track.

In our retail business, January and February are generally quiet months following a very busy year-end period. The recovery in demand during March and April was affected by increased uncertainty, although this has already begun to normalize again. One key aspect worth highlighting is that the leading indicators of underlying demand have shown a steady year-on-year improvement even though the conversion rate in March and April was lower. Nevertheless, the high level of reservations gives us confidence that there will be catch-up effects once geopolitical tensions ease. Sentiment has already started to improve somewhat. In the coming months, we also expect an additional boost from the planned sales starts of new projects.

In our institutional business, we have made very good progress. At this relatively early stage of the year, we are in advanced negotiations for 2 deals with a total volume of approximately EUR 80 million. We expect these transactions to be signed shortly, which would already represent an important milestone toward our full year sales target. We are also in discussions regarding further institutional transactions. Overall, this positive momentum reinforces our confidence that despite short-term disruptions, the recovery in demand is continuing.

Another area impacted by the Middle East crisis is construction costs. The rise in crude oil prices is, of course, having an impact on certain oil-based and energy-intensive building materials. Nevertheless, we remain confident that we will stay well within our overall cost budget for 2026. This is supported by prudent cost assumptions and clearly by our strong market position.

Let us now take a brief look at our financial KPIs for the first quarter of 2026. Adjusted revenues amounted to EUR 79.3 million. The colder than usual winter had a negative impact on construction output, but we expect this to be caught up in the coming months. We anticipate significantly higher revenues in the upcoming quarters, supported by rising sales. Our gross margin remained at a very healthy level of 27.6%, which clearly represents a benchmark in our industry. While this level should not be extrapolated, we are very comfortable with our full year target of more than 24%.

Adjusted earnings after tax totaled EUR 0.9 million. This figure is distorted by the low top line in Q1. Accordingly, we expect a significant improvement as revenues rise and operating leverage unfolds in the coming quarters. Sales volume was broadly stable at EUR 41.7 million. In our private customer business, sales increased by 5.9% year-on-year despite the short-term negative impact from the macro environment. Supported by sales launches and our institutional business, we expect a marked acceleration in growth as of Q2. As an additional value indicator, tangible book value per share stood at EUR 14.50.

Based on business performance in the first few months of the year and the continued positive underlying trend in demand indicators, we confirm our guidance for 2026. We expect revenues of EUR 550 million to EUR 600 million, a gross margin of more than 24% and adjusted net earnings of EUR 35 million to EUR 40 million. As a leading indicator for our business, we expect sales to increase to EUR 650 million to EUR 750 million.

There remains a prolonged or intensified crisis in the Middle East, which has already lasted longer than most of us initially expected. We cannot ignore the fact that a certain stabilization of the macro environment remains a key factor for the short-term development of our business.

Turning to Slide 4 in our presentation. Our sales ratio shown in the upper chart reflects the combined effects of weaker seasonality at the beginning of the year and the recent dip caused by geopolitical tensions. This temporary decline has been amplified by increased uncertainty on the banking side, with mortgage approval processes currently taking much longer. Sales in our private customer business are nonetheless up by roughly 6% year-on-year.

The development of underlying demand as reflected by our lead indicators looks considerably stronger. Reservations are significantly above the levels of previous year. We assume that a large portion of this demand will materialize once tensions in the Middle East ease. We have already observed some improvement in sentiment following the shock in March. In addition, we expect a meaningful boost from the new supply recently brought to the market. All of these products are ideally aligned with attractive tax incentive schemes for energy-efficient new builds.

The first sales launches, such as the second tranche of our Duisburg project near Dusseldorf via our subsidiary, nyoo, have already generated a high number of reservations within just a few weeks. This is very encouraging. The coming months are expected to be very busy, with several upcoming launches that should significantly accelerate our sales momentum.

A particularly positive development is the progress on the institutional side, which is exceeding our expectations from the beginning of the year. We are close to signing of 2 transactions with a total volume of around EUR 80 million. This represents a major step towards our [indiscernible] at an early stage in the year. As you know, institutional business is typically skewed towards the second half of the year. We are also in discussions regarding additional transactions, including potential JV partnerships with international investors. Overall, we are seeing encouraging momentum, which further supports our full year sales outlook.

On Slides 5 and 6, we provide an overview of the key market indicators relevant to our business. Despite heightened macro uncertainty and continued interest rate volatility, prices for new builds in Germany's top 7 cities are at least stable or moderately increasing, underscoring the resilience of this asset class. This assessment is consistent with our own on-the-ground experience. We have already started to implement selective price adjustments in certain projects aimed at buy-to-let investors.

The persistent scarcity of residential space in metropolitan areas, combined with sustained healthy rental growth [indiscernible] driver of positive underlying market dynamics. This is especially true for high-quality, energy-efficient new builds. The price premium for energy-efficient buildings continues to rise, and the renewed energy crisis is likely to further reinforce this trend. The lower chart shows rental growth in the top cities based on data from Bulwiengesa. While growth has moderated from elevated levels, it remains on a robust long-term upward trajectory.

Slide 6 illustrates construction price inflation over time. The latest data from the Federal Statistics Office confirms a broadly stable trend over recent quarters. These figures do not yet reflect the most recent increase in oil prices, which is already affecting certain oil-related building materials. Nevertheless, as also evidenced by our Q1 margin, we remain well positioned to outperform the market.

So far this year, costs have remained below our internal projections, with only limited inflation. Our strong market position and bargaining power with midsized construction companies are key factors. Nonetheless, we should be realistic and prepare also for rising construction costs as of next year, although capacity utilization in the industry is currently very low. A significant portion of this year's construction volume has already been secured.

Turning to Slide 7. Our gross development value, GDV, remained broadly stable at EUR 7 billion during the quarter, excluding our share in joint ventures. The share of projects in presales continues to increase, reflecting our high level of land acquisitions. The operational risk profile remains very low, with 89% of units under construction already being sold. The presold volume of EUR 2.7 billion provides high visibility for future revenues and cash flows. Revenue not yet recognized amounts to approximately EUR 435 million.

We continue to create value through our business model by securing building rights for our land bank over time. Over the past 12 months, we have made further progress on approvals, increasing our zoned land bank to around EUR 2 billion. This enhances our flexibility and allows us to bring additional product to market as soon as demand strengthens further, including the institutional segment.

Since the beginning of 2025, we have secured land plots for projects with a GDV of around EUR 1.3 billion, of which approximately EUR 500 million are allocated to our JV business. These JV projects are accounted for at equity and under our current definition and are not included in the EUR 7 billion GDV figure, which reflects only fully consolidated projects. The installed share of these JV projects now exceeds EUR 800 million.

We remain active on the acquisition side with an extensive pipeline. Further land acquisitions are expected in the coming months, and we are on track to acquire projects with a total GDV of at least EUR 2 billion by the end of 2026. As stated previously, we see a very attractive window of opportunity given increased supply and still limited competition. The current macro environment may further support this dynamic. We continue to prioritize shorter duration projects, which should further strengthen our growth profile over the next 2 to 3 years.

With that, I would now like to hand over to David for the financial section of the presentation.

Thank you, Kruno. Let me now walk you through our Q1 2026 results in a bit more detail, starting with our adjusted results of operations on Slide 9. In Q1, our adjusted revenues were still below the prior year level, largely due to the comparatively cold winter in Germany and the resulting lower construction output. This will not affect our full year targets. Together with our construction partners, we have put plans in place to ensure that this work is made up over the course of the year. Higher construction output, combined with increasing revenue contribution from accelerating sales, is expected to lead to significantly higher revenues in the coming quarters.

We continued to deliver a very strong gross margin of 27.6%, once again reflecting our industry-leading profitability. Overall, construction costs came in slightly below our expectations, supported by our strong market position and prudent cost assumptions. While the Q1 results should not be extrapolated, we remain well on track to achieve our full year gross margin target of more than 24%. We are seeing some cost inflation in building materials. However, as mentioned by Kruno, we do not anticipate a material impact on our 2026 results, as the majority of this year's construction volumes have already been fixed.

On a quarterly basis, platform costs were somewhat higher than last year. This was partly driven by nonrecurring items such as expenses related to the LTIP program. Despite general cost inflation, we do not expect a significant increase in platform costs for the full year 2026.

Further down in the P&L, net interest expenses increased slightly. This was mainly due to a modest increase in net debt driven by higher investment activity, as well as lower share of capitalized interest resulting from the ramp-up in construction starts. The tax rate was also slightly higher and broadly in line with our full year budget, reflecting lower expected profit contributions from joint ventures.

The bottom line result of approximately EUR 1 million in Q1 has only limited relevance for the full year. It is distorted by the low level of construction output during the winter quarter. The low top line in Q1 represents an outlier, and due to the operating leverage of our business model, profitability is temporarily depressed. In the coming quarters, both operating and financial leverage will work in the opposite direction, and we anticipate significantly higher profits.

Moving on to Page 10. Thanks to the strong cash generation projects, we have ample headroom for growth, which we have already started to deploy through the acquisition of high-margin projects. Our still low loan-to-cost ratio of only 18.8% and net debt-to-EBITDA of 4x at the trough of the earnings cycle continue to underscore our very solid financial position. We will continue to pursue our land acquisition strategy in 2026 in order to capitalize on the current window of opportunity. Higher investment activity will result in a temporary increase in leverage ratios until cash conversion starts to kick in. Nevertheless, a strong balance sheet remains a core pillar of our business model.

Turning to the next slide. Over the past few years, we have repeatedly demonstrated the strong cash-generating capability of our business model. While we continue to expect substantial cash inflows from presold projects, we have now entered a new growth and investment phase. Since Q1 2025, we have acquired land plots for projects with a gross development value of approximately EUR 1.3 billion. We expect total acquisitions with a GDV of at least EUR 2 billion by the end of 2026, corresponding to cumulative acquisition costs of around EUR 300 million for 2025 and 2026. These investments will be financed partially on our balance sheet and partially together with project partners. You can expect further updates on this in the coming months.

In addition to land investments, cash requirements will temporarily increase for projects that have entered the construction phase. This reflects the nature -- the natural cash flow profile of retail projects, where working capital investments are required early on, with cash flows turning positive as construction and sales progress. Nevertheless, as you can see, we generated a positive operating cash flow even in the first quarter. Building on the strong cash generation of recent years, our liquidity position at the end of the quarter amounted to nearly EUR 220 million, which is largely available to fund growth investments and the planned ramp-up in construction activity.

At the corporate level, only a small amount of debt remains drawn. As a result, our net cash position at corporate level exceeds EUR 110 million. In addition, we have undrawn credit facilities of more than EUR 190 million, providing further financial firepower. Accordingly, the financing of our planned growth investments is fully secured.

Chart 12 shows the current financing structure of our corporate debt, which is largely unchanged. We intend to draw our term loan raised at the end of 2025 and which amounts to close to EUR 50 million over the course of the year, which will more than offset the scheduled debt repayments in 2026.

Turning to our outlook. Based on our business performance to date, we confirm our guidance for 2026. We continue to expect sales volumes of EUR 650 million to EUR 750 million. As discussed, numerous sales launches and expected institutional transactions should drive a significant acceleration in growth in the coming months. We anticipate adjusted revenues in the range of EUR 550 million to EUR 600 million, a leading gross margin of more than 24% and adjusted earnings after tax of EUR 35 million to EUR 40 million. As already mentioned, the prolonged crisis in the Middle East, accompanied by sustained uncertainty and economic disruption, remains the main risk factor to our outlook.

With this, I would like to conclude the presentation and hand over to the Q&A session.

[Operator Instructions] Our first question comes from Thomas Rothaeusler with Deutsche Bank.

A couple of questions. The first one is on the institutional business. Just wondering if you would call the recovery a sustainable recovery? And also just to understand what are the drivers, basically? And you point to further institutional deals with JV partners. Just wondering if you could provide more color? Maybe also on the magnitude, what we could expect?

Thomas, thank you for your question. So first of all, I think it's to mention that we clearly see that our cost advantage we have with our affordable housing segment is now paying out. We are able to offer a product achieving our margin, but also achieving the return requirements of investors. And this clearly helps us currently a lot.

You know that we have always said that for the social housing segment, the demand has stayed very stable and is not influenced by any interest rate development. And we also see an increase of appetite from different investor types for prefinanced residential investments. And if you get to the corridor of a cash-on-cash yield of 4% to 4.5%, you will find investors who are willing to invest. And again, what helps us is that we are, as Instone, a cost leader in the market, and we are able to meet the requirements of the investors and our gross margin expectation.

Looking at the JV. And here, maybe also to be mentioned that we're making very good progress. We have one very large project in Dusseldorf, where we are finalizing the negotiation with a potential partner. And we have other projects where we are currently discussed with many interested parties who are willing to build, to hire Instone as a company providing the construction works and the planning and who think that currently is the best way or, let's say, time period to invest and then to sell the product when it's finalized in a time period where the broader market has come back and offering very attractive returns. Hopefully, I've answered your question.

Yes. Great. The second one is on your sales guidance, which is EUR 700 million midpoint, actually. And as I remember correctly, I think it was like EUR 200 million at the beginning of the year, you earmarked basically for the institutional business. Just wondering if you would assume a different composition nowadays after the first quarter?

I would say the potential is there. So of course, we will -- if there is for us, the chance to sell more to institutional buyers for, I would say, for a good margin, we will, of course, take this chance. I believe there is a chance we can do more.

I also want to mention that we are still confident that we also get to the target, what we have made ourselves for the B2C business, which is, of course, a bit dependent of the further activities in Iran. But only also to be mentioned is that if you compare the first quarter sales volume, which is nearly the same as the first quarter in 2025, I have to say that we haven't had any sales starts in this year. We had very strong sales starts in '25 with Duisburg and Frankfurt Lahnwarte.

And now we are starting a couple of projects. So we are -- we have prepared now, 8 sales starts in the second quarter, which clearly have -- already have an influence because we have roughly 40 units which are -- where we already have notary deeds agreed and another 110 reservations, which, of course, will lead to a notary deed in a couple of weeks. So we make, clearly, progress also in the B2C business.

Okay. Good. The last one is actually on sales starts. I mean, did you change your plans for this year? Maybe -- it seems like you have at least turned a bit more cautious with sales starts in the first quarter, obviously, on the weaker sentiment from the Middle East conflict. Just to get a better understanding on what we should expect for the rest of the year.

So I think we will get to the number we initially planned. So we had in the first quarter, maybe a delay of 3 to 4 weeks for the one or the other project. But I don't see this as a massive shift in comparison to what we have planned.

The next question comes from Thomas Neuhold with Kepler Cheuvreux.

I have two. The first is on cost inflation. You mentioned that the high oil price is starting to have an impact on construction costs. I was wondering, what is your guesstimate for cost inflation this year and next year? And do you think that house price inflation will at least match cost inflation? Or is there any risk that margins might come under pressure in the medium term? That's the first question.

Hi, Thomas. So looking at the construction costs and CPI development, I think we have initially calculated for this year, a CPI growth, 2% to 3%. Which, from my perspective, will stay below that. So we clearly have in the first 4 months now, very successfully purchased works where we are really significantly below our budgets.

And the reason for that is that the construction industry has currently an average capacity utilization which is slightly above 60%, which is really low. So the construction companies, in this -- let's say, in this segment of our business, they are suffering currently through the overall situation. And this helps us with our negotiation power to get to really attractive prices.

Now looking at the Iran conflict, of course -- and we currently are in negotiation with construction companies. And what we clearly see on the ground is that they are still accepting fixed prices over a longer time period. And only a few are discussing with us, prices which are more flexible due to price inflation rates. So here, we still see on the ground that the construction companies are willing to make fixed prices, and we are very, very comfortable with our budgeting. And we believe that for this year, construction -- CPI won't have any negative influence on our gross margin.

If I look to the next year -- and I'm more skeptical a couple of weeks ago when the war started or was when we have seen the first reactions and the first inflation discussion. But currently, I would say that due to the low utilization rate, which won't get better really, let's say, in the next couple of months, I believe that CPI growth will stay on a level maybe of inflation of roughly 3%. This is our current assumption.

And this is also plays true if I go through the different scenarios. So if the demand is catching up, the demand will catch up if the Iran conflict ends. The same scenario, I would say, for the CPI. And also in the weaker scenario, if the conflict stays longer, then the construction companies are suffering further. So for all these scenarios, I think a 3% CPI inflation number for next year, from my perspective, should be realistic.

Okay. And my next question is on the acquisitions. You still target more than EUR 2 billion of GDV in total at the end of this year. I was wondering if you can provide more color on if there are any projects in the pipeline which might materialize in the short term? And generally on the market situation on the ground, are there more projects in the market now than, let's say, 3 or 6 months ago? Is there more or less demand, more competition for projects? What do you see? And what do you think?

So I think overall, the situation, let's say, in the last 6 months hasn't really changed massively. So we are in a very good position in the competition. So we have the capacities. And there is competition, but it's, of course, a limited one when you look at the different negotiations we are currently working on. You have always 1, 2 competitors, but it's not like 10, 15. So -- and these competitors are often family offices, or it's a combination of private equity for zoned lands. And I have to say that we are overall, very confident. So we have -- we are currently finalizing 2 bigger acquisitions, which clearly will pay in to reach our target of the EUR 2 billion. So big cities, one bigger project in Berlin, for example, and we are very confident.

Looking at the overall strategy, I have to say that zoned land or land which could be zoned in a short time distance in the top cities is a very rare, let's say, product. So I believe that it makes a lot of sense for us now to invest. And you have to also have in mind that after the Ukrainian war started, the companies haven't really invested time to develop new projects. So we have a 4 years, if you like, time lag of developers not investing work into new projects. And this will lead to a massive scarcity of zoned land in good locations, where we also believe that if the market recover, the land price inflation will start to go on massively due to the fact that there's a very scarce product there, and it takes a lot of time to activate land plots.

Our next question comes from Jochen Schmitt with Metzler.

I have three questions, please. Firstly, if the EUR 80 million of potential sales volume to institutionals were to be signed soon, may we assume these contracts to generate around EUR 25 million of adjusted revenues in either Q2 or Q3? That would be the first question.

Second one, basically a follow-up again on institutional sales. Are you confident that demand by institutional investors in the second half of the year might be at least as high as in the second half last year? And the last question, do you expect to reach the 30% premarketing ratio for some projects in either Q2 or in Q3? These are my questions.

Let me start with question number one. So I think the assumption that approximately EUR 25 million from the EUR 80 million will translate into revenues during the course of '25 is approximately right.

Regards the second one and the -- of course, the second half is the stronger part of the year. I hope that we won't see the same hockey stick. So hopefully, we will see a bit more in the first half in comparison to what we have seen last year. So hopefully, the end year really in the last quarter won't be as strong as we have seen it last year. And the third one, we have a couple of projects where we expect the 30% hurdle rate to be achieved and also construction start this year.

The next question comes from Philipp Kaiser with Warburg Research.

Just a couple of follow-up. Starting with revenues. I mean, due to the kind of soft start to the year, the H2 weighting for this year is now extreme. Could you walk us through the key revenue recognition triggers for the last 3 quarters to get a feeling, how comfortable you are to reaching your guidance?

So maybe first the first answer, let's say, we have started a bit weaker than initially expected for this year due to the strong winter we have seen. What helps us is that, as mentioned before, the capacity of the construction companies is available. So we are forcing now to bring more people on the ground and to catch up with what we have maybe missed in the first quarter. And here, we feel very comfortable due to the low capacity utilization of the construction companies.

And of course, when you look at the overall development of this year, it's fair to say that the revenue recognition quarter-by-quarter will increase due to the fact that we are increasing the sales start activities. So increasing the sales volume step by step, we want to launch roughly 20 sales starts. And this leads clearly to the highest revenue number in the last quarter. So you have, I would say, a continuous step-up of revenues over the course of the year.

Perfect. You mentioned the -- yes, the low capacity helps you. Has the construction sites already caught up by April or early May? So do you see any catch-up effect already on the construction side?

So you will -- I think it's -- it won't completely be recovered in the second quarter, what we have missed in the first one. So we will see this more spread over the year because the biggest, let's say, delay was in the shell construction, the winter month. And what we are currently doing is to increase the speed in the other works. So of course, we try to increase the speed in the shell works. But in addition, we are bringing more power on the ground in the other parts of the construction activities to compensate and speed up with overall construction activities.

Okay. Very, very helpful. And then with regards to the retail segment, just a quick follow-up. Have you seen reservation activity normalize or start picking up from the temporary negative effect in March and April, into, yes, early May? Any picking up here?

Yes, it has picked up. I already mentioned the numbers. So we clearly have, let's say, increased the number of notary deals in preparation and also the reservation numbers by launching also new projects. And I also see that the people have been shocked a bit, I would say, of course, to the war. And we have seen an increase of interest rates by -- for 100% financing from 4% to 5%, which is, of course, a lot.

On the other hand, you know that the overall depreciation scheme is not really completely, I would say, it's still very attractive as a program. But the people needed time. And in addition, what we also see is that the banks needed more time to give feedback and agree to financing. So this has a bit normalized. The people have accepted the situation. The banks are, I would say, also working now more regular, I would say. And this gives us some confidence.

But of course, it's also helpful if the war stops. So you know that we have said at the when we have guided through the year that the war should stop in a couple of weeks. Now we are in the 10th week. And this is fair to say if the war is further ongoing, then we have to look at it again. So currently, we feel very comfortable. But of course, the war is influencing our business, clearly.

Okay. That's very helpful. My next one is on the leverage. What's your peak leverage tolerance during the current investment cycle? Or is it more like an opportunity [indiscernible]?

So I think we always mentioned that our focus will be on LTC,, loan to cost, where we think we will be at the peak, somewhere between 30% and 40%, definitely below 40%. And that is our key driver to look at.

Now on the net debt to EBITDA, I think as long as we have a bit of a depressed EBITDA, you might see an increase also in Q2 of net debt to EBITDA, which can go somewhere to 5x. But we definitely also keep that under close scrutiny and believe that EBITDA should increase again towards the second half or in the following years again. So that should also come down.

Perfect. And my very last question regards to Westville. So the sale of Westville 2 and [ for the NBA ] generated roughly EUR 30 million of one-off other operating income, but also materially [ resharp ] your balance sheet. How much of the entire Westville project is now still in the portfolio? And what is the residual revenue and probably, margin contribution you expect for this year and maybe also next year?

So, I'll start off. I think we have -- Westville will be finalized by mid of this year. So that's number one. And therefore, you will have only effects from revenue contribution this -- during the course of this year. Now in terms of remaining revenues, I am not 100% sure how much remaining revenues there are. To not give you unprecise numbers, I think we should come back to you.

Very helpful. That will finalize mid this year. That helps a lot.

[Operator Instructions] Our next question comes from Manuel Martin with ODDO.

Two questions from my side. Maybe one by one. The first one would be coming back to the Iran war. One aspect is prices. Another aspect could be supply chains. Have you seen or heard about any effects on the supply chains that are concerning for you? Or supply chain issues which could appear because that might affect also the construction work? Maybe you could give some color on that, please?

Yes. Manuel, so we don't see any effects in comparison to what we have seen with the Ukrainian war when it started. So there's -- from our perspective and our analysis, no risk for supply chain problems for our business, what we currently see here.

Okay. Right. My second question would be on potential investors. I think there was an article in the German press about U.S. investors looking for houses in Germany. Is it something that you have seen as well, that maybe some U.S. investors might approach you for JVs or something similar?

Yes, for JVs. So what we -- this article is based on this townhouse investment of the one or the other U.S. investor. The -- and this is, I would say, only a few where we see broader activities are renting products or investment in resi developments in the top cities. And here, we are in a lot of conversations with potential partners who would love to do projects with Instone.

And as we said a few times before, this is a clear strategy of ours to increase our access to developments by partnering with international investors. And our interest here is, of course, to increase our return on equity, and in addition, have access to land plots for a very, very reasonable pricing in the current market environment. It makes a lot of sense to secure land and clearly benefiting from the, let's say, the market development in the future. So clearly, a part of our strategy to partner with international money here.

Okay. All right.

Maybe just your last question, Philipp Kaiser, on Westville revenue contribution. So there's approximately EUR 21 million of revenues remaining on the Westville side.

Ladies and gentlemen, this was our last question. I would now like to turn the conference back over to the management for any closing remarks.

Thank you for your participation. If you need further information, please do not hesitate to contact the Instone IR team. Thank you, and goodbye.

Thank you. Bye-bye.

Thank you.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.

Ladies and gentlemen, welcome to the Publication Annual Report 2025 in Essen, Germany. I'm Sergen, the Chorus Call operator. [Operator Instructions] And the conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Burkhard Sawazki, Head of IR and Capital Market Communications & Strategy. Please go ahead, sir.

Good morning, everyone. I would like to welcome you to our full year results earnings call. Our CEO, Kruno Crepulja; and our CFO, David Dreyfus, will walk you through our presentation and give you an update on our current business performance and our outlook for '26. As usual, this will be followed by a Q&A session.

With this, I would like to hand over directly to Kruno.

Hello, everyone, and thank you for joining our Q4 results earnings call. When we look back on 2025, we are pleased to note that we have achieved all of our operational and financial goals, which is not a given in a still challenging market environment.

Furthermore, and this is equally important, we continue to strengthen the foundation for accelerated future growth. The most critical factor, as you all know, has been the demand side in recent years. Therefore, it is clearly encouraging to see that the recovery is continuing to gain momentum. We witnessed robust demand in the fourth quarter, which was by far the strongest quarter since emergence of the crisis.

Our retail business remains the main growth engine. Sales in this customer segment more than doubled in 2025, primarily due to demand from private buy-to-let investors. The attractive tax incentives have clearly been a game changer. Growth accelerated further over the course of the year with new sales starts contributing significantly to this momentum.

An important contributor to achieving our full year sales target was also our institutional business, with the signing of deals totaling EUR 140 million in the fourth quarter alone. We are also observing a slow recovery in this segment. We are currently in advanced negotiations on the first deal for 2026, which gives us reason for cautious optimism in this customer segment as well. Nevertheless, we expect the private investor business to remain the key demand driver also in 2026, and we are preparing for this by significantly increasing our planned sales launches.

Due to the growing importance of the private investor business, we have taken a strategic step to further strengthen our sales activities. Together with 2 experienced partners, we have recently founded Vestway, our own sales company as a joint venture. This will help us to significantly increase our market penetration and sales performance while also improving our margins.

The first project to be marketed through this new digital platform is our Mosaic project in Düsseldorf, and I'm pleased to report that it has had a strong start with the first sales contracts already signed.

Let's now take a brief look at our financial KPIs for the full year 2025. We reached adjusted revenues of EUR 504.4 million, in line with our expectations. We expect 2025 to mark the trough of the cycle for revenues and earnings and anticipate a gradual recovery starting in 2026.

Our gross margin stayed at a very healthy level of 23.8%. This was even slightly better than we initially expected. We believe that this is still the benchmark in our industry and underscores our operational excellence.

Our adjusted earnings after tax amounted to EUR 31.6 million, also well with our targeted range. And as already discussed, on the back of the strong retail business and the contribution from our institutional deal, the sales volume increased significantly to EUR 502.3 million.

Coming to our dividend proposal. You have seen our recent news release that we intend to pay a dividend of EUR 0.43. We believe that our very strong balance sheet allows us to distribute a higher dividend while continuing to pursue our growth trajectory. The proposed dividend corresponds to an attractive yield of 5% at current depressed share price levels. The idea is that the EUR 0.43 represent a floor for the coming years. With this signal of strength, we want to further bolster investor confidence in our equity story.

As additional information now that we have clearly passed the trough, the tangible book value per share amounts to EUR 14.12. We expect the recovery to continue in 2026, and we anticipate a clear upward trend in sales, revenues and earnings. Therefore, we expect revenues to be in the range of EUR 550 million to EUR 600 million, a further expansion of our gross margin to more than 24%, supported by high-margin projection acquisitions. And at the bottom line, we anticipate adjusted net earnings of EUR 35 million to EUR. As the leading indicator for our business, we expect sales to increase to EUR 650 million to EUR 750 million. This forecast is mainly based on continued strong growth in the private investor business. A more dynamic recovery in the institutional market would offer significant additional potential for growth acceleration.

Our forecast is, of course, based on the assumption that the conflict in the Middle East will not be prolonged and will not have any lasting economic impact. Unfortunately, negative effects cannot be ruled out in the event of a prolonged period of uncertainty with rising inflation and interest rates.

Moving on to Slide 4 in our presentation. Our sales ratio shown in the upper chart illustrates the sound sales performance of our retail business, especially at year-end. At the beginning of the year, there is traditionally weaker seasonality, but the sales ratio after a temporary dip has already reverted to its long-term mean in recent weeks. This points to another dynamic year-on-year increase in Q1.

Sales to private buy-to-let investors will remain the key growth engine in 2026. We are responding accordingly to the strong demand in this customer segment, and we will significantly expand our sales offering for products tailored to the attractive incentive schemes. We plan to double the number of sales launches year-on-year, which is expected to be a key driver of substantial volume growth.

On Slide 5, we provide a breakdown of our sales and revenues in 2025. While our private customer business has become the most important sales contributor with a share of roughly 60%, revenues are typically somewhat lagging and presold projects from the institutional business were still the main revenue pillar in 2025. For 2026, we expect a continued moderate recovery in the institutional business. We are already in advanced talks for an institutional deal, which currently looks very encouraging. Nevertheless, many traditional co-investors are still reluctant to buy for various reasons.

At the same time, the private investor business offers much stronger short-term visibility. Therefore, this customer segment will likely become our most important source of revenues in the near future.

Our optimism for the retail business also based on the market's positive response to our sales launches last year. This makes us very confident that we can further scale up this strong performance by expanding our offering.

On Slide #6, we provide you with an overview of last year's sales starts with the current status as of the end of February. We have seen very strong momentum for our project in Duisburg, near to the border of Düsseldorf, Gefylde near Stuttgart and Lahnwarte in Frankfurt. Also, the project KöSlinger Weg near Hamburg, which we launched in Q4 is showing very strong sales momentum.

To be fully transparent, all of our projects are in line with or ahead of their targets. The sales speed for our project in Hofheim near Frankfurt is, for instance, somewhat slower, which is in line with our expectations as the apartments of this project have larger average living spaces and are, therefore, primarily designed for owner-occupiers rather than buy-to-let investors. We are addressing all relevant customer groups.

The subproject of our Parkresidenz project in Leipzig is a slightly different situation. The building complex is a listed building. As you can see, we are seeing very strong demand for this product, too.

Our last sales start was the Mosaic project at the end of the year. This is the first project that we are marketing through our new in-house sales platform, Vestway, which we have recently founded.

Additional projects are in the pipeline. And in recent weeks, we have started the premarketing of several projects. Therefore, you can expect further progress with additional sales starts in our next quarterly update.

On the next slide, you'll find an introduction to our recently founded sales platform. This is a joint venture with 2 well-established and experienced partners, Knight Frank Frankfurt and Homebase, a digital platform for private buy-to-let investors. This platform will act as an additional sales channel alongside our existing distribution channels. Key target clients are buy-to-let investors. To address this customer group, Vestway will focus on digital sales via corresponding online channels. The clear objective is the building up of a nationwide platform.

The rationale is to further strengthen our sales capabilities, broadening market penetration while also reducing dependence on external distribution platforms. A key advantage is also to retain part of the margin in-house. The brokerage fees agreed with Vestway are considerably lower than what we are currently paying to other external distribution platforms, which should provide additional support for our margins.

We have just started our sales activities and the first apartments of the Mosaic project have already been successfully sold. There's a steep ramp of our new platform with a pipeline of several sales starts over the course of the year. We view this as an important strategic step for scaling up our private customer business.

On the following Slides 8 and 9, we provide you with an overview of relevant market indicators for our business. Despite the broader macro uncertainties, including the volatility in interest rates, prices for new builds in the top 7 cities remained stable or grew moderately on a year-on-year basis with a stable development during the last quarter. We also observed a positive underlying trend, and we are starting to implement the first price increases in some sales projects geared towards buy-to-let investors.

The rising scarcity of residential space in the metropolitan areas, which is also reflected in sustained very dynamic rent growth remains the key factor for the positive underlying development. This is especially true for highly energy-efficient, good quality new builds. The price premium for energy-efficient building continues to rise. The rent development in the top cities based on the data from Bulwiengesa is shown in the lower chart on this slide. Rents remain on a dynamic structural growth path with maybe a slight recent slowdown from elevated levels. Rents are also still outpacing general inflation, which has also stabilized.

Moving on to Slide 9, which illustrates construction price inflation over time. The most recent data points from the Federal Statistics Office confirm a very stable trend over the last few quarters with rather moderate CPI growth. We are also sticking to our own view based on our own on-the-ground experience that cost price inflation for larger residential projects is still lower due to the continuing weak order situation for midsized construction companies, which gives us strong negotiation power.

As our gross margin development demonstrates, all of our projects are well within their cost budgets. At the same time, we would like to point out that the war in the Middle East can have a meaningful impact on material costs, and we continue to monitor the situation carefully.

Moving on to Slide 10. In light of increased acquisitions, our GDV climbed to EUR 7.1 billion, excluding our shares in JVs despite rising completions. A slightly lower volume of projects currently under construction is more than offset by a higher GDV in the presales and preconstruction phase. The operational risk profile remains very low with 90% of the units under construction already being sold.

The presold volume of EUR 2.7 billion provides high visibility for future revenues and cash flows. The volume [Technical Difficulty] recognized amounts to more than EUR 470 million. We are creating value by securing building rights for our land investments over time. We made further progress on the approval side during 2025 and our land bank with zoning rights increased to around EUR 1.8 billion. This also gives us flexibility and allows us to bring additional products to the market as soon as we see an even stronger market recovery, including the institutional segment.

We secured and acquired land plots for projects with a GDV of around EUR 1.2 billion in 2025. As mentioned in the past, out of this, approximately EUR 500 million have been allocated to our JV business. The JV projects will be treated as at-equity projects and their respective GDV is not included in the EUR 7.1 billion, which just comprises the fully consolidated projects.

The Instone share of these JV projects has increased to more than EUR 800 million. The GDV of the EUR 7.1 billion alone, therefore, [Technical Difficulty] Instone's total business volume.

Acquisitions via JV structures offer significant benefits. They allow us to fully capture attractive land acquisition opportunities in a buyer's market, scale our proven operational efficiencies, optimize risk diversification across our portfolio and enhance return on equity. We continue to have an extensive deal pipeline, and we are well on track to acquire projects with a total GDV of at least EUR 2 billion by the end of 2026. We still see a highly attractive window of opportunity for acquisitions with the property market having bottomed out with a rising supply of attractive buying opportunities and with still low bidding competition.

We are currently focusing on projects with a shorter duration, and therefore, our acquisitions should further strengthen our growth profile over the next 2 to 3 years.

With this, I would now like to hand over to David for the financial section of the presentation.

Thank you, Kruno. Let me now walk you through our full year 2025 results in a bit more detail, starting with our adjusted results of operations on Slide 12.

Our adjusted revenues were slightly below previous year's level and in line with expectations. The decline is attributable to the expected somewhat lower construction output. We expect this trend to reverse and return to top line growth in 2026. We have continued to deliver a very healthy gross margin of 23.8%, which was even a notch better than we anticipated at the beginning of the year. This clearly reflects an industry-leading profitability, and it is again testament of our operational excellence.

I think it is a very strong message that we are able to maintain very healthy gross margins throughout the cycle. Recent acquisitions of higher-margin projects and cost savings in selling expenses are providing upside potential to our gross margin even without additional HPI growth.

Our platform costs in the fourth quarter were higher than in the previous year. This increase was largely attributable to the lower release of provisions compared to the previous year. The releases in 2024 were more of a one-off effect and the underlying platform costs were largely stable. The development of personnel expenses serves as a good proxy for this. They stayed largely flat at slightly below EUR 50 million for the full year 2025. We do not expect a significant increase in platform costs in 2026 despite overall cost inflation.

Further down in the P&L, our net interest expenses increased slightly. This was mainly attributable to a lower share of capitalized interest due to rising number of construction starts. On the bottom line, we posted earnings after tax of EUR 31.6 million, which is above the midpoint of our guidance range. I think it is fair to say that this is a very solid result at the trough of the earnings cycle.

Over to Page 13. Thanks to the significant cash generation from presold projects in recent years, our financial leverage has dropped to a very low level, which gives us ample headroom for growth. While we have started to deploy our capital into new opportunities, our leverage ratios have increased only marginally so far and remained at very low levels. A low loan-to-cost ratio of just 11.9% and a low net debt-to-EBITDA of 2.8x clearly reflect our strong financial position.

Some purchase price payments acquired in 2025 are still due in the first quarter of this year, and we will continue to execute our land execution strategy in 2026. The increased investment activity will lead to a temporary rise in leverage ratios, say, over the next 18 to 24 months until cash conversion starts to kick in. Nevertheless, you can rest assured that the strong balance sheet will remain a key cornerstone of our business model.

Moving to the next slide. Over the past few years, we have proven that our business model can produce strong cash flows. While we still expect substantial cash contribution from our presold projects, we have now entered, as just mentioned, a new growth and investment cycle. We bought land plots for projects with a GDV of EUR 1.2 billion in 2025, and we were able to negotiate deferred payment structures, further supporting capital efficiency and the IRR of these projects. We will continue to acquire projects and expect total acquisitions with a GDV of at least EUR 2 billion by the end of 2026. This corresponds to expected acquisition costs of around EUR 300 million for 2025 and 2026 in total. A good part of this will be financed and part of it might be borne by project partners.

In addition to investments in land, there will also be a temporary increase in cash requirements for our new projects where we have started construction. This is mainly attributable to the typical cash flow profile of retail projects where typically investments must be made in working capital during the early construction phase with cash flows turning positive with increasing construction and sales progress. However, we still generated an operating cash flow of more than EUR 50 million before land acquisition payments in 2025, which further strengthens our financial flexibility for acquisitions.

On the back from the recent years, our liquidity position at year-end amounted to more than EUR 250 million, which is predominantly available for growth investments and envisaged construction ramp-up. This is only a smaller -- there is only a smaller drawn debt position on corporate level remaining. Accordingly, the net cash position on a corporate level amounts to almost EUR 150 million.

Moreover, we were able to secure a term loan of EUR 47.5 million in the last quarter of 2025 and thus increased our undrawn credit facilities to slightly above EUR 190 million [Technical Difficulty] as a result, the financing of our planned growth investments is fully covered.

Chart 15 provides you an overview of the current financing structure of our corporate debt, which is, I guess, rather self-explanatory and without major changes.

Finally, coming to our outlook on Slide 16. After having achieved all of our operating and financial KPIs in 2025, we expect the market recovery to continue in '26 with an improvement across all of our relevant metrics. We expect our sales volume to reach EUR 650 million to EUR 750 million. This does not yet assume a recovery of the institutional market, which provides additional upside in the medium term.

We expect adjusted revenues in the range of EUR 550 million to EUR 600 million, a further expansion of our gross margin to above 24% and earnings growth with expected earnings after tax of EUR 35 million to EUR 40 million. The rising sales volume should translate into accelerated earnings growth from 2027 onwards.

In the current geopolitical situation, we unfortunately cannot ignore the disclaimer that our outlook assumes that there will be no prolonged conflict in the Middle East and therefore, no lasting macroeconomic turmoil that would affect our business model.

With this, I would like to conclude the presentation and move on to the Q&A session.

[Operator Instructions] And we have the first question coming from Thomas Neuhold from Kepler Cheuvreux.

I have 3, and I think it's the best to take them one by one.

Firstly, on the crisis in the Middle East, I was wondering, did you see already any kind of impact on the demand after the outbreak of the crisis? And I was also wondering which building materials could potentially be impacted if the crisis is longer than expected? And did you already react like starting to order more raw materials or building materials where you could face a shortage or significantly higher prices if the crisis lasts longer?

Yes. Thank you, Thomas. So on the ground, we currently don't see any impact. So the reservation number and also the notary deed agreements, they, I would say, we are working on this without any interruption. But of course, we have to wait and see in the coming weeks and months, is there more influence. But on the ground, we currently see no real influence.

Your second one, maybe I can also mention that the first weeks have been very positive from overall demand from all the customer groups. So we start very positive into this year. And on the B2C business, there's currently no impact.

Your second one regarding material cost inflation or cost price inflation for construction, maybe a general -- first, a general picture. So our purchasing processes are, let's say, up to date are going quite well, and we are purchasing below our budgets. You know that we have generally priced a slight cost price inflation for this year in our calculation, but we believe that we will see more sideward development due to the fact that the order books of the construction companies are still weak, and there's really low construction activity, let's say, in the market.

And there, we see a strong negotiation power count on our side. But of course, if the war is going further and you have impact on energy costs, this always results in cost price inflation on materials, which are energy-intensive or oil-based. So like any insulation material, et cetera.

Looking at the experience we made in the past, so our purchasing strategy is currently to, let's say, to be very early in the purchasing process, also to buy the companies in more than one phase. So if we are having a tendering process for the first phase, we are also securing the prices for the coming phases. So this is our current strategy. And our, let's say, overall view is that we feel very comfortable with our budgets, we think this is really robust, and we don't see significant risks here from cost price inflation due to the fact that we already have built up buffers in the first couple of weeks.

Okay. Understood. And my second question is on this Vestway JV. I was wondering if you can provide more details on how it exactly is going to work? Which portion of your targeted EUR 650 million to EUR 750 million? Sales volume will go through this joint venture? And what is your share in the joint venture? And how will sales and earnings be recognized from the joint venture?

So when we look at the overall sales guidance of EUR 650 million to EUR 750 million you can assume roughly that 60% roughly is dedicated to buy-to-let investor channel. And I would assume that approximately of the 60%, 60% to 70% will be addressed by our Vestway company and the rest will be addressed by the platforms we are working together for many years. So this is the volume you can approximately calculate.

Regards to overall, I would say, the cost -- let's say, the second question was the share. Our share is currently 50%. And regards to your question, financial metrics, et cetera. So -- our calculation is that the sales costs should come out at a level of roughly 5%. And of course, we plan to generate a margin working with this company. So this will lower further the 5%. I can't say now an exact number, but I believe it could reduce the 5%, maybe down to 4% or below.

And you said you have 50% in the JV. Will it be fully consolidated or that equity?

It will stay at equity. It will stay at equity.

Okay. And my last question is more for David, I guess, on the outlook for the operating cash flow this year. Is it a fair assumption that it might be negative again to the increased number of project starts you will have this year for particularly retail investors?

Yes. I think assuming [ pre-land ] costs we're talking, assuming the starts that we will have, it's fair to say that at least we will see something closer to a breakeven or below 0 in terms of cash flow.

The next question comes from Manuel Martin from ODDO BHF.

Two questions from my side, please. The first one would be on German politics. So far, have you noticed any further notable impulse coming from German politicians to support new constructions? And do you expect some impulse anyway? That would be the first question, please.

So what we clearly see on the ground is that the cities are willing to -- where it's possible to use this so-called [indiscernible], so improvement in, let's say, speed up -- speeding up the zoning process and building permit process. This we clearly see on the ground. So the government -- city governments are really thinking of where to use it and how to help. So this is clearly positive.

Regards to subsidies, we have -- we are in discussions or we see that the government -- let's say, the government is discussing further guarantees or subsidies for owner-occupiers. Is there a -- yes, a final decision brought? Not yet, but I believe that they will come up a program. That's my stomach feeling for supporting owner-occupier sales. But let's see what is happening. This would be upside for us, clearly.

Regards to lower bureaucracy and all this staff discussing this reduced standard called Type E. Here, the government is currently trying to finalize this process. I personally support these activities because I believe that the standard in Germany is in -- the basis standard is high. So this could also additionally help going forward. Yes, these are the discussions we currently see on the ground not being reflected in any way in our guidance.

Okay. I see. My second question would be on the institutional investors. As you described, though they are still a bit reluctant, but mood seems to improve or the interest seems to improve. Can you give us a bit more -- maybe a bit more color on what your institutional investors are maybe thinking or what are their fears or what could raise the appetite of institutional investors? Maybe you could give us a bit more color on that, please.

Yes, sure. So when you look generally at 2026 and our guidance, I think the -- what we have planned is that the sales volume in 2026 on the institutional side is comparable what we have achieved in 2025.

On the other hand, we see improvements here. So you know that the co-ops, which have bought last year, they are still very interested to buy further projects. Which client group we have missed in the institutional sales have been the pension funds, but our feeling is that they are coming back, not all of them, but the one or the other. And we also see that the forward time period.

So investors accepting in the past, we've seen forward sales 24, 30 months or longer have been accepted. Then we have seen that the institutional buyers have looked more at already finished projects or 6 to 12 months near to being finished, and this is a bit changing. So we see that there are the first signs of pension for money or institutional money also discussing with us the classical forward structures, which is positive generally. So there is some upside. We have to see what are the influences now from the Iran situation, but the first weeks have been encouraging here.

And when you look at the 2 -- let's say, the sales volume we are targeting this year, I have also to say that EUR 100 million of this sales volume for 2026 is dedicated to social housing, which has been always a very stable sales channel over the whole crisis time because it's not really influencing the interest cost because the project is financed by state and city sources. So a significant portion is already social housing. And then we have another EUR 40 million, which is on the lower rent price level affordable. So also, I would say, a very stable product type. So what I want to say with that is that we have a very conservative guidance for institutional sales for this year, and there could be upside always looking at what the conflict in Iran is doing with us.

[Operator Instructions] There are -- we have last question from Philipp Kaiser from Warburg Research.

Just 2 follow-ups. Firstly, starting with your gross margin, you achieved 23.8% in 2025, now guiding for more than 24% for the current fiscal year. Is it purely driven by the mentioned cost control and the prudent cost assumptions?

Philipp, it's David. So I think what you can say is that we're starting with more of the newer projects that we go into the sales process where we have a bit of a higher margin on average or we have higher margins on average than with our existing, I think, in mix that helps us to increase the margin now going forward.

Okay. Perfectly understood. But yes, for the coming years, [indiscernible] the current macro environment, the margin should rise driven by a higher percentage of sales started from the recently acquired, more active projects and then probably, a higher part of sales margin keeping in-house by the recently launched joint venture.

Yes. I think we always said that we generate 23% to 24% gross margin through the cycle. And I think I agree if there is improvement in sales price inflation, et cetera. So we will, of course, benefit from it. But I think the 23.8% or 24% margin is a good indicator for the future, I would say. Additionally, I think what David said, we also looking forward this year, we have to say that the influence we have with the big Frankfurt project is gone because this project is handed over, which has been at the lower margin levels, and this is also one of the triggers why we get to 24%, let's say, margin guidance for 2026.

Okay. Perfect. Understood. I mean it's the 23.8% and also the 24% are superb margins. And you mentioned in recent calls that you currently acquire quite active attractive new projects. So I thought it might be only the floor at least for a couple of years coming ahead. But yes, thanks for the additional information.

And the last one is with regards to your financial gearing, slight increase, but still on very, very low levels. And if you would take all your envisaged acquisition volume into account, could you indicate a rough ballpark for the loan to cost where you might stand by the end of this year?

Well, I think what we said is that with taking everything into account, we don't want to pass sort of the 40% LTC mark. So we'll move within the 30% to 40% range, I would say. And then midterm, want to come down again from those levels.

There are no more questions at this time. I would now like to turn the conference back over to Burkhard Sawazki for any closing remarks.

Thank you for your participation. If you need further information, please do not hesitate to contact the Instone IR team, thank you. Goodbye.

Thank you. Take care.

Thank you.

Ladies and gentlemen, the conference is now over, and you may disconnect your lines. Goodbye.

Ladies and gentlemen, welcome to the Instone Real Estate Group SE Q3 2025 Results Conference Call. I am Hillie, the Chorus Call operator. [Operator Instructions] The conference is being recorded. The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Burkhard Sawazki, Head of IR and Capital Market Communications and Strategy. Please go ahead.

Thank you. Good morning, everyone. I would like to welcome you to our Q3 earnings call. Our CEO, Kruno Crepulja; and our CFO, David Dreyfus, will walk you through our presentation and give you an update on our current business performance. As usual, this will be followed by a Q&A session.

With this, I would like to hand over directly to Kruno.

Hello, everyone, and thank you for joining our Q3 earnings call. We are pleased to report another very solid set of results for the third quarter in a macro environment that is still characterized by considerable uncertainty. We have witnessed a further pickup in demand with strong growth in sales to private investors, which has even exceeded our own expectations at the beginning of the year. Our retail sales surged by some 88% compared to the previous year. The third quarter was the strongest quarter in our private customer business since the emergence of the crisis in 2022. We expect continued very positive momentum also in the current final quarter with tailwind from seasonality and from further sales starts, which have become a major growth driver. On the other hand, it must be noted that the speed of recovery in the institutional transaction market has not quite met overall market expectations. Overall market uncertainty seems to be having an even greater impact on this segment. Nevertheless, we are making good progress in negotiations on various institutional transactions.

Having closed our first institutional deal in Q3 with a volume of EUR 55 million, we are confident that we will be able to sign further transactions by the end of the year. Interest from institutional investors to invest in German residential new builds is definitely rising. We have already pointed out in our recent calls that we see an improved environment for acquiring land. I'm sure you have seen our latest press release on this that we have already secured projects with a GDV of more than EUR 1.1 billion year-to-date. This clearly demonstrates that we are currently very determined to take advantage of this window of opportunity and to capitalize on our strong balance sheet to further strengthen our growth profile. We are currently buying projects with above-average returns and mainly with the existing zoning or far advanced in the zoning process, two, allowing faster realization. As a result, we anticipate a short-term EPS accretion from these acquisitions. We continue to have a very extensive pipeline, so you can expect further attractive deals in the coming months. Our target is to purchase projects with a GDV of EUR 2 billion by the end of next year.

Let's now take a brief look at our financial KPIs for the first 9 months of 2025. We reached adjusted revenues of EUR 347.5 million, fully in line with our expectations. We expect a stronger seasonality in the fourth quarter, also due to the revenue contribution sales starts, the signing of institutional deals and generally stronger sales seasonality in the fourth quarter. Our gross margin stayed at a very healthy level of 23.9%. We believe that this is still the benchmark in our industry and underscores our operational excellence. Our adjusted earnings after tax amounted to EUR 21.4 million, indicating that we are well on track for full year target. On the back of the strong retail business and the contribution from our institutional deal, the sales volume increased significantly and reached EUR 229 million. As mentioned, you can expect a strong year-end business and significant rise in the sales volume in the fourth quarter.

On the basis of rock solid 9-month performance and the current demand indicators, we are confirming all of our financial and operating targets for the full year 2025. While we want to provide you with a bit more color on where we expect to end up in Q4. We expect revenue to be more likely in the lower half of the guidance range of EUR 500 million to EUR 600 million, and we expect adjusted earnings after taxes towards midpoint of our EUR 25 million to EUR 35 million guidance. Our sales target of EUR 500 million also remains unchanged.

Moving on to Slide 4 in our presentation. Our sales ratio on the upper chart illustrates the sound sales performance of our retail business. There is usually a spike when we start sales and subsequent a temporary slowdown, but the chart clearly demonstrates that the underlying upward trajectory of our B2C sales. Our sales ratio of around 2% has reverted to its long-term mean as a sound foundation for our business. In the first 9 months, our retail sales jumped by around 88% compared to the previous year, which reflects a further growth acceleration during the third quarter. A key driver for this positive development was, as just mentioned, the acceleration in sales starts. The projects were well received by the market. Our new projects we are offering to the market are ideally tailored to the attractive tax incentive scheme for new builds for private buy-to-let investors. This customer segment has emerged as the most important buyers group. The tax incentives are a powerful driver of demand, and we expect this customer segment to deliver the strongest growth going forward. As a consequence, we have decided to focus even more strongly on this customer group in our strategy. This includes, for example, establishing our own sales activities and significantly strengthening our sales power, focusing on buy-to-let customers in order to be able to fully capture this attractive business potential. We expect further accelerating sales momentum in the first quarter -- in the fourth quarter with support from additional sales starts and general favorable seasonality for our business at year-end.

For the full year 2025, we, therefore continue to expect 10 sales launches. As a reminder, we did not have any B2C sales starts at all in 2024. For 2026, we anticipate a further increase in the number of sales starts, which will pave the way for further significant rise in our sales volume. The general investor sentiment is improving. Also, all relevant investor surveys confirm that German residential remains on top of the investment agenda for institutional real estate investors. However, short-term investor appetite remains sluggish with many investors still preferring to stay on the sidelines for the time being. Nevertheless, after having signed our first institutional deal, a subproject of [indiscernible] to local cooperative with a volume of EUR 55 million, we are making good progress on a number of additional institutional deals. We currently have several institutional deals at an advanced stage of negotiation with a volume of around EUR 120 million. Accordingly, we have good reason to be optimistic that we can expect additional signings by year-end, though a deal is only signed when it's signed.

Although our assessment at the beginning of the year, like that of most other market participants regarding the speed of the institutional investment market recovery has not been fulfilled, we nevertheless believe that we are on track to achieve our sales targets for the year as a whole. The stronger retail business can compensate for the weaker recovery in the institutional market.

On the following Slide #5, we provide an overview of the sales starts year-to-date with their current status. We have seen very strong momentum for our project in [indiscernible], [indiscernible] Düsseldorf, [indiscernible] Stuttgart and our land water project in Frankfurt. The performance of our project in Duisburg, which is planned and executed by our subsidiary Nyoo is quite outstanding. We have sold more than 70% of the first sub project within just a few months. The price point of around EUR 5,000 per square meter, which can be achieved with our new product is considered as highly attractive. Also, the performance of our Frankfurt project is worth highlighting as we have to date already sold almost 40% just with our own internal sales force. Sales levels for the projects in Duisburg, Frankfurt and Stuttgart are ahead of our targets, and we thus were already able to start construction ahead of schedule for all these projects. The sales speed for our project in [indiscernible] near Frankfurt, as you can see, is lower. This is in line with our expectations as the apartments of this project be larger average living spaces and as they are more designed for owner-occupiers rather than buy-to-let investors.

We have just recently started marketing of our 2 latest projects in Nuremberg and in the Hamburg region. [indiscernible] picture has been confirmed. In the first few weeks, we have already secured a substantial number of reservations and OTV contracts. The subproject of our Park Residence project in Leipzig is maybe a special situation. The building complex is a listed building. As you can see, we are seeing very strong demand for this product as well.

On the following Slide 6 and 7, we provide you with an overview of relevant market indicators for our business. Despite the larger macro uncertainties, prices for new builds in the top 7 cities continued their moderate upward trend on a year-on-year basis with a stable development during the last quarter. The rising scarcity of residential space in the metropolitan areas, which is also reflected in sustained very dynamic rent growth remains the key factor for the positive underlying development. This is especially true for highly energy-efficient, good quality new builds. The rent development in the top cities based on the data from [indiscernible] is shown on the lower chart on this slide. Rent growth remains at elevated levels and property yields of existing properties are witnessing a further yield expansion, while interest costs have stabilized over the last month. Rents are also still outpacing general inflation, which has also stabilized. This provides the foundation for making investments in new build apartments increasingly attractive to a broader range of customer groups, thereby supporting the ongoing market recovery.

Over to Slide 7, which illustrates construction price inflation over time. The most recent data point from the Federal Statistics Office confirm a stable trend over the last few quarters with a rather moderate CPI growth. We are also sticking to our own view based on our own on the ground experience that cost price inflation for larger residential projects is currently still considerably lower due to the weak order books of construction companies, which is giving us strong negotiation power. All of our projects are well within their cost budgets. Instone is currently leveraging its strong market position across multiple areas from securing attractively priced construction services and project opportunities to financing of its investments and also driving sales as a trusted partner for our customers.

Moving on to Slide 8. Although several projects are progressing well and some have already been completed, our GDV continues to rise. This is driven by the addition of new projects to our portfolio, particularly in the presales phase, which is reflected in the growing share of this segment in the pie chart. Our operational risk profile remains at comparatively low level as we maintain a very high presales ratio of 91% of our projects under construction. This is also providing a high level of cash flow visibility and is clearly a key differentiator compared to our peers. Our presale projects provide a stable source of future revenues of around EUR 350 million as well as for secure future cash flows. Over the past 2 years, we have already generated substantial cash flows from these presold projects under construction, which has significantly strengthened our financial position. We are now leveraging this financial firepower by acquiring new projects with clearly above-average return potential.

We have secured and acquired land plots for projects with a GDV of more than EUR 1.1 billion year-to-date. Approximately half of this volume is planned to be realized in cooperation with strong financial investors through joint ventures. These potential JV structures are particularly relevant for large-scale projects and offer significant benefits. They enable optimized risk diversification across our portfolio and enhanced return on equity by the generation of additional income streams from the project partners. We still have an extensive deal pipeline. And as we already mentioned, it seems pretty likely that you can expect further land acquisitions in the coming months. We have set ourselves the target of acquiring projects with a GDV of EUR 2 billion by the end of 2026. We currently see a window of opportunity for acquisitions, the property market having bottomed out with a rising supply of attractive buying opportunities with prices for land plot having undergone a significant price correction and with very low bidding competition. We are currently focusing on projects with a shorter duration, and therefore, our acquisitions should clearly help us to further strengthen our growth profile in the coming 2 to 3 years. With our existing portfolio, we have also done our homework on the approval side during the past years, and we have made good progress in further developing our pipeline. As soon as the market reopens more broadly, we will be able to further accelerate our sales with our existing land bank, consisting of projects that have already obtained construction rights of around EUR 1.9 billion at the end of the third quarter.

With this, I would now like to hand over to David for the financial section of the presentation.

Thank you, Kruno. Let me now walk you through our Q3 2025 financials in a bit more detail, starting with our adjusted results of operations on Page 10. Our adjusted revenues are slightly below previous year's level as anticipated. This is mainly attributable to a slight decline in construction output. However, with stronger seasonality expected in the fourth quarter and the expected timing of several institutional deals, we anticipate Q4 to be the strongest also in terms of revenue recognition. Thanks to better-than-expected sales performance and the earlier than planned start of construction of our projects in Duisburg, Frankfurt and Stuttgart, we will also see accelerated revenue contribution from these projects in the fourth quarter. Accordingly, we are confident and well on track to achieve our revenue guidance.

We have continued to deliver a very healthy gross margin of 23.9%, which remains an industry-leading profitability at this stage of the cycle. The result shows us also to be well on track to achieve our full year margin target of around 23%. To put this into perspective, even at the trough of the cycle, we are generating higher margins than many of our competitors, including the other ones we were able to generate at the peak. This is a strong testament to our operational excellence. Moreover, the projects we are currently acquiring are expected to lay the foundation for further margin expansion in the future.

Our platform costs were slightly below previous year's level despite ongoing cost inflation, mainly due to lower LTI provisions and also due to a lower number of FTEs. Further down in the P&L, our net interest expenses increased slightly during the third quarter. This was attributable to a slight increase in net debt, mainly due to our investments in working capital. As a result, we reported an adjusted earnings after tax of EUR 21.4 million, reflecting very solid profitability despite the current bottom of the cycle and fully in line with our expectations.

Over to Page 11. Thanks to the significant cash generation from presold projects in recent years, our financial leverage dropped to a very low level, which gives us ample headroom for growth. While we have started to deploy our capital into new opportunities, as Kruno has just mentioned, our leverage ratios have increased only marginally and stayed at a very low level. A low loan-to-cost ratio of 13.6% and the low net debt-to-EBITDA of 3.1x clearly reflects our strong financial position. Although in light of our planned growth investments, you can expect our leverage ratios to increase steadily. However, I would like to reiterate our statement that the strong balance sheet will remain a cornerstone of our business model.

Moving to the next slide. Over the past few years, we have been able to demonstrate that our business model has the capacity -- capability and capacity to produce very attractive cash flows. While we still expect substantial cash flows and cash contribution from our presold projects, we have now just entered a new growth and investment cycle. We are clearly committed to taking advantage of the current [indiscernible] opportunity for land purchases and acquiring projects with above-average return potential. We are going to acquire projects with a GDV of some EUR 2 billion by the end of 2026. This corresponds to expected total acquisition costs of around EUR 300 million. Part of this will be financed and part of it might be borne by project partners as Kruno mentioned, our potential JV partners.

In addition to investments in land, there will also be a temporary increase in cash requirements for existing projects. This is mainly attributable to the typical cash flow profile of retail projects, where typically investments must be made in working capital during the early construction and sales phase with cash flows turning positive with increasing sales levels and construction progress. We have a chart on our cash flow of typical retail projects in the appendix of our investor presentation. The strong cash generation of Instone in the past resulted in a liquidity position of more than EUR 220 million at the end of the third quarter, with the vast majority being available for land acquisitions and some for the sales and construction ramp-up as just mentioned.

Due to the fact that the debt position contains mainly project-related debt, Instone has a significant net cash position on corporate level of some EUR 150 million. Just as a side note, our debt covenants relate primarily to our corporate net debt position and not to our total debt position, including project debt. Thus, our corresponding debt ratios in relation to our covenants are extremely comfortable. In addition to our cash on hand, we have access to revolving credit facilities totaling around EUR 140 million, increasing our financial firepower for land acquisitions. Chart 13 gives an overview of our current financing structure. There were again no major changes during the quarter worth highlighting. Thus, I would like to move on to our final page, Page 14.

In light of our very solid 9-month results and our current business development, we are also confirming our forecast for the full year 2025, and we would like to provide a bit more color on where we expect to end up in Q4. We expect our sales volume to reach EUR 500 million. We expect adjusted revenues to be more likely in the lower half of our guidance range of EUR 500 million to EUR 600 million and a sustained high gross margin of around 23%. Bottom line, we expect an earnings after tax approximately towards the middle of our guidance range of EUR 25 million to EUR 35 million.

With this, I would like to conclude the presentation and move on to the Q&A session.

[Operator Instructions] The first question comes from the line of Thomas Rothaeusler from Deutsche Bank.

Yes. The first one is on the institutional business. Just wondering what it takes or what do you think it takes for a more meaningful recovery there?

Thomas, let's dive a bit deeper into the institutional market to give you here our, let's say, our experience we are currently making. So, what we are seeing generally is the rent price inflation remains high. And this gives the owners of properties, of course, the possibility to increase the property yields, which is positive. On the other hand, we are seeing falling completion rates, which are further tightening the rental market. And the rental growth is outpacing the CPI, which should support, of course, the sales volume going forward. And now the question is why don't we see the fast recovery here. So, in the first market phase, the investors were focused on -- more on newly built residential assets, which had been finished, but not sold yet. So, we've seen here a lot of traction in the market. Market segment is, I would say, sold out. So, this should help us going forward. And there is no real supply of such kind of product, which we expect in the next, let's say, next time period because it's already sold. So, this is, I think, positive. What we also see is that the investors are focusing on the top metropolitan areas, really the top cities. And this is also the reason why we focus in acquisition exactly to the same profile, acquiring projects which we can sell to B2B but also B2C clients. Now what do we expect going forward? And how are our current discussions we have with investors. So, the appetite of investors is there. The attractivity of resi is from our perspective there and increasing steadily. The problems which investors are currently having is, on one hand, refinancing pressure. So many investors are focused on refinancing existing office portfolios. They have, of course, discussions with the banks regarding valuation. And therefore, this is limiting clearly the capacity for new acquisitions. We see also slow recovery of capital inflows. This remains sluggish. And there is a cautious investment sentiment. So overall, we think that '26 will be better, massively better than '25, but by far not normalized as we have seen precrisis. And here, I think potential acceleration factors are, of course, the further interest rate development, potential subsidies of the government. But this is the current situation we are seeing in the market.

Okay. Another question on the retail business. I mean, you are significantly scaling up your activities there. Just maybe to get a bit more color on what could be the sales volumes there maybe for next year or if you're shy of guiding next year and maybe in general, just to get a better understanding of the ramp-up.

So, it's, of course, a bit too early to give a clear guidance on 2026. What we can say is that the number of sales starts we plan for next year will significantly be above what we have launched this year. So, I think we can nearly double the sales starts for the coming year. And this gives you, I would say, a good feeling for what is possible in the B2C buy-to-let investor market. So, we see a very strong appetite. We have designed all the, let's say, the sales start really mainly to the buy-to-let investor space. And we see very, very strong momentum here. And this momentum, we want to also additionally increase by our sales organization, which we are – which we already have started to build up. So, we have built up a company together with partners to improve and to increase the volume in sales additionally to the existing very good performing sales platforms we are partnering with. But here, we think that this could be a significant driver going forward to increase the sales volume in the buy-to-let investor space.

And how do you look at the competition for this tax incentive product? I mean, do you see more competitive products coming to the market?

So of course, we are not the only one who is offering the product. But there is still, I would say, a limiting factor is, on one hand, the developers, there's only a very limited number of developers who are able to start construction to get the construction financing. And when we look at acquisition and we are acquiring a significant number of projects which are perfectly -- which perfectly fit to buy-to-let investor space being top cities, metropolitan areas, here, we don't see really competition from -- or, let's say, we see competition, but it's, of course, let's say, very, very low -- on a very low level. So, there's only a very limited number of companies who are able to buy land and to start construction, getting the financing, and this is limiting the supply of this kind of product.

The next question comes from the line of Philipp Kaiser from Warburg Research.

Just a couple of follow-ups. I would start also with the institutional business. You mentioned during the presentation that you are in advanced negotiation with institutional investors and also a volume of roughly EUR 120 million. Could you elaborate a bit more on the deal size of any deal if it roughly in the ballpark of EUR 40 million to EUR 50 million each?

So, what we can say is that we have one project, which is roughly EUR 60 million to EUR 70 million, and then we have additionally 3 to 4 smaller deals with EUR 10 million to EUR 20 million.

Okay. Very helpful. And with regards to the retail segment, I'm looking back at the also printed down on the Page 4, the last quarter tends to be the most active one. Do you expect this also to be true for the last quarter of this year? Do you have already any visibility?

Yes, we have. So, as I already mentioned, we have further increased the volume of sales starts in the last quarter. And as it is like always that the first few weeks and few months with sales start, the momentum is quite huge. You're generating significant numbers of sales. And therefore, we believe that the last quarter will be by far the strongest quarter this year.

Perfect. So is it fair to assume that that will be the true you only need a couple of those deals to close to reach what you also stated the lower end. So, it's kind of a bit down [indiscernible] due to the strong last quarter of the retail segment.

Yes. What -- let's say, we are confident that we will achieve our sales target for this year. So, we made very good progress in the negotiation of the institutional deals and the sales activities in the retail business are going as planned due to the fact that we have here key indicators. Before we sign the notary deed, we have pre-reservations and [ net- ]reservations. And in this process, we clearly see that we will get to our numbers this year. And of course, for the institutional business, we have to sign these deals. We have not only one candidate in the process for each project. So therefore, we are confident, but of course, there's always a remaining risk, but we don't see here for us currently the situation that we get under the EUR 500 million.

Okay. I mean it's totally clear [indiscernible] that as higher the retail sales, as lower the risk on the deals. So yes, the retail segment remains as strong that might lower the pressure on the individual institutional...

What I would like to add here is also that at the beginning of this year, the overall sentiment for institutional sales was much better. You remember -- and what makes us positive going forward is that the buy-to-let investor space has improved much better. So, we have been positive on that. But now we know that this group is -- that this business could be significantly higher. And it's also the reason why we are still able to get to the EUR 500 million target, but the institutional market was weaker than initially forecasted. And I think what helps us going forward is if the buy-to-let business is strong and we can generate even more when the institutional market is coming back, on the broader basis, this will probably be better than what we maybe have initially hoped, let's say, 12 months ago. So, we are here on this, let's say, overall situation quite positive, and we will try to push further the buy-to-let market. And of course, we don't forget the institutional business. This is always an important pillar, but it's good to see that the buy-to-let investor space is performing better than we initially thought it will perform.

Yes, yes, of course. And maybe one general question, looking at the different projects or different segments, retail segment and segment, could you kind of easily switch projects, which might be initially thought marketing for institutional to the retail segment and kind of the -- maybe the market remains subdued for a couple of time and the retail appetite still increases. Could you just easily switch those projects from one pillar towards the other one?

To be very clear, yes, the -- I would say, the mix of living space is similar, I would say, between buy-to-let and institutional business. It would be a bit different if you try to switch from owner-occupier to institutional. But for what we are planning is all the projects we are currently preparing, they fit to the depreciation scheme, and this means that we can easily switch from buy-to-let to institutional sales.

Okay. Perfect. So, it means that also projects for the - E&C ] business are kind of designed for the special depreciation scheme. So, when you switch it, it's...

[Operator Instructions] The next question comes from the line of Manuel Martin from ODDO.

3 questions from my side, please. In terms of acquisitions, where you have become significantly more active, could you elaborate a bit on the total firepower that Instone might have in terms of project price maybe GTV and course connected to that, how much you see would you allow Instone to have in the acquisition activities?

Yes. Thank you, Manuel. This is David speaking. So, we think that we will acquire, as mentioned, around EUR 2 billion GDV until end of '26, which translates into EUR 300 million of value in terms of land plot of which the financing, just approximately to give you an idea, is estimated to be around 50%. So leaving around EUR 150 million, which you could see as cash outflow if we would do all the deals by ourselves and if we wouldn't have partners with us. So, as we are looking for partners, this will be even reduced. Now we have currently EUR 220 million of cash available. We have on top EUR 140 million of RCF. So north of EUR 300 million. We are currently also looking at raising additional corporate debt to fill up our firepower. So, we have ample room to actually grow above the EUR 2 billion just mentioned. and scale our business accordingly.

Okay. And the OTC...

Sorry, that's a good question. We are currently at the 14% as you have seen, that will go up. I think you can assume that we will not cross sort of the 40% line. That is sort of where we want to be is ideally in the 30% to 40% area.

Okay. I understand. And a more general question when it comes to -- sorry, I forgot one. The acquisitions, do you have the kind of target of IRR that you have in mind for the acquisitions?

Yes, we are generally looking internally when we do our approvals at IRRs, which are north of 20%.

Okay. And a more general question, final one. It's on politicians and the famous [indiscernible]. What's your opinion? Or do you think about the discussions around [indiscernible], what could happen and how could this influence you and the sector in general? Maybe you have an idea on that?

I think the -- overall, the [indiscernible], of course, the German government is shifting responsibility for accelerating approval process to local authorities. And I think this could be positive in the one or the other metropolitan areas. So, we currently -- we are having a few projects in Düsseldorf, for example. And the city is thinking of where to really to implement this process where they don't need a master planning. So, one or the other cities is really thinking of how to fasten building permit or master planning processes. But again, I think it depends on the will of the local authorities to use the tools. And therefore, it will be, I would say, a mixed picture. We will have regions where this could be positive for us and regions where it doesn't really change the situation. So, this is my view on [indiscernible]. Yes, it will help in some places. But I think it's the main game changer.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back to Burkhard Sawazki for any closing remarks.

Thank you for your participation. If you need further information, please do not hesitate to contact the Instone IR team. Thank you.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call and thank you for participating in the conference. You may now disconnect your lines. Goodbye.

Ladies and gentlemen, welcome to the Instone Real Estate Group SE Q2 2025 Results Conference Call. I'm Mattilde, the Chorus Call operator. The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Burkhard Sawazki, Head of IR and Capital Market Communications and Strategy. Please go ahead.

Thank you, Matt. Good morning, everyone. I would like to welcome you to our Q2 '25 earnings call. Our CEO, Kruno Crepulja; and our CFO, David Dreyfus, will walk you through our presentation and give you an update on our current business performance. As usual, this will be followed by a Q&A session. With this, I would like to hand over directly to Kruno.

Yes. Thank you, Burkhard. Good morning, everyone, and thank you for joining our Q2 earnings call. In an overall macro environment that continues to be affected by numerous uncertainties, we are pleased to have achieved a very solid set of half year results. We continue to see very robust demand in retail sales, which has exceeded our own expectations. While we had no retail starts in 2024, we decided to start the sales process of 4 new projects during the first 6 months of this year. All of them have been very well received by the market [with] strong momentum. These new projects are ideally tailored to the tax incentive scheme of the Growth Opportunities Act, which allows highly attractive post-tax returns for buy-to-let investors. Accordingly, the trend that private investors have become the most important buyer group was again confirmed in the second quarter.

Moreover, we are also witnessing rising demand from owner-occupiers. All in all, we saw an accelerated sales growth in retail sales in the second quarter with a sales growth rate in the first 6 months of 58% compared to H1 2024. Sales starts are an important sales growth driver. Following the sales start of 4 projects in the first 6 months, we are planning 5 further sales starts focusing on retail sales by the end of this year. We clearly expect this to generate additional positive sales momentum in the coming months. It is still quite apparent that the institutional investment market remains more challenging. Our institutional sales for 2025 are geared towards the second half of the year and especially towards Q4 as planned. Against this backdrop, we are glad that we were able to sign our first institutional deal just after the reporting date in July. We sold a medium-sized subproject of a larger project in the top 7 German metropolitan region. The terms were fully in line with our expectations. I think this was really a good result.

We also view this as an encouraging signal that the institutional market is continuing its gradual recovery. The interest from investors is rising, and we are in talks for several other deals. In our last call, we emphasized that the market environment for project acquisition is making a turn for the better. While we were still very selective last year, partly due to a lack of attractive opportunities, we are now seeing a significantly greater supply of attractive growth opportunities. Accordingly, and in line with our communicated strategy, we are now increasing our investments in our land bank. Currently, we have 5 deals either just signed or very close to signing with a total GDV of around EUR 350 million. We expect above-average margins and IRRs on our acquisitions. We are taking advantage of the current window of opportunity, and there's more to come.

At this point, I think it's also worth mentioning that you can expect continuity and stability at Board level of Instone in the years ahead. The Supervisory Board has extended the contract of my colleague, Andreas Greve, until end of 2027, and I will also stay on the Board for the coming years, which I'm convinced will be a very promising phase for the company. My new contract will run until mid-2029.

Let's now take a brief look at our financial KPIs for the first half of 2025. We reached adjusted revenues of EUR 231 million, fully in line with our expectations. We expect a stronger second half also due to the revenue contribution from the upcoming sales starts of additional projects focused on buy-to-let investors, the signing of institutional deals and a generally stronger sales seasonality. Our gross margin stayed at a high level of 25.3%. It is once again a strong indicator of our operational excellence. However, in line with our planning, we still expect a slightly lower margin in the second half of the year. Our adjusted earnings after tax amounted to EUR 17.2 million, which also shows that we are fully on track for our full year financial target. Including the seasonally weaker first quarter, our H1 sales reached EUR 96.3 million.

The year-on-year comparison is distorted by an institutional deal in the first quarter of the previous year. As pointed out, the underlying demand indicators currently look clearly positive with dynamic growth in the retail business. With the contribution of the institutional deal just signed in July, we can expect to see a significant positive year-on-year sales growth in H2. On the basis of the very solid H1 results and the current demand indicators, we are also confirming our outlook for the full year 2025. We expect revenue in the range of EUR 500 million to EUR 600 million, a very healthy gross margin of around 23% and adjusted earnings after taxes in the ballpark of EUR 25 million to EUR 35 million. Our sales target also remains unchanged at more than EUR 500 million.

Moving on to Slide 4 in our presentation. Our sales ratio on the upper chart illustrates our sound sales performance of our retail business. There are usually certain spikes at sales starts and subsequent temporary slowdowns, but the chart clearly demonstrates the underlying upward trajectory of our B2C sales. In the first 6 months, our retail sales climbed by 58% compared to the previous year, which reflects a further growth acceleration in the second quarter. Our sales ratio currently stands above the long-term mean. A key driver for this positive development was, as mentioned, our additional product we offer to the market with our sales starts. The projects were well received by the market. As mentioned, these projects are ideally tailored to the attractive tax incentive scheme for new builds, which represent a very powerful demand factor. There is a pipeline of 5 additional planned sales starts in the second half of the year to let investors, which promises additional growth acceleration in our private customer business.

General investor sentiment has improved. The rising awareness that German residential prices have bottomed out and that we are entering a new upward cycle with support from dynamic rent growth, especially for new builds is also a very important reason for this. This top-down view is also shared by institutional investors even though this customer segment is still lagging behind in the recovery process. There is still a greater reluctance to buy among this group of buyers. Against this backdrop, we are, of course, very pleased that we were able to sign our first deal year-to-date already at the beginning of the second half of this year. I also believe that it provides a really encouraging signal regarding our full year sales targets.

The institutional business is, as you know, always seasonally quite back-end loaded, but we can confirm that we are in concrete and promising discussions for several further institutional transactions. On the following Slide #5, we provide an overview of the sales starts year-to-date with the current status. As already highlighted in our last call, we have seen an especially strong sales performance of our project in Duisburg at an attractive micro location close to the border of Düsseldorf. We have already sold almost 60% of the first of 2 subprojects just within a couple of months. Our group [subsidiary new] with its innovative product that is based on digital and models planning is responsible for this project. With our new concept, we can offer apartments at a highly competitive price point of around EUR 5,000 per square meter, which contributes to the attractiveness of this innovative product.

We have already started construction work and therefore, also generate revenues ahead of schedule. We are selling the Lahnwarte project Frankfurt, predominantly with our internal sales resources. With the current sales speed, we are well on track for the expected construction start in the fourth quarter. For the project in Gefilde Stuttgart, we started the sales process in June after receiving final building permits. We have already seen a very decent number of sales and significant backlog of notary appointments and reservations. Here, we are also confident that we can start construction this year.

The fourth project in Hofheim Frankfurt has been contributing to our sales in July and also here, we are seeing good momentum. Due to a higher share of apartments, which are more tailored to the demand of owner occupiers, we anticipate a somewhat lower sales speed for this project. However, we have already collected a decent number of reservations, which makes us confident for this project as well. Again, all of these projects benefit from both the 5% degressive depreciation in combination with a 5% special depreciation over 4 years for energy-efficient buildings.

On the following Slides 6 and 7, with an overview of relevant market indicators for our business. Despite the larger macro uncertainties, prices for new builds in the top 7 cities continued their upward trend, albeit at a still moderate pace. The rising scarcity of residential space in the metropolitan areas, which is also reflected in sustained dynamic rent growth is a key driver for this. This is especially true for highly energy-efficient, good quality new build. The rent development in top cities based on the data from Bulwiengesa is shown on the lower chart on this slide. Rising yields from rental growth were a crucial factor for stabilization of prices after the rate shock experienced during the past years.

Rents for new builds are still outpacing price development and inflation. Therefore, rising yields are making the product even more attractive and thus demand for new builds should grow. Over to Slide 7, which illustrates construction price inflation over time. The most recent data from the Federal Statistic Office confirm a stable trend over the last few quarters with a rather moderate CPI growth. However, I would like to reiterate our statements from the last calls. Based on our on-the-ground experience, the cost price inflation for larger residential projects is lower due to the very favorable competitive situation we are experiencing at the moment. Construction activity for larger residential projects is clearly decreasing. We at Instone are clearly benefiting from this and not only from a cost perspective. Finally, all of our construction projects are well within budget.

Moving on to Slide 8. Instone continues to report a very high presales ratio for its projects under construction. This is a key pillar for reducing the operational risk profile and increasing the cash flow visibility. This high presales ratio is an important differentiator compared to our peers. To give you a brief update on this, project worth EUR 2.5 billion are currently under construction, of which 92% have already been sold. This provides a stable source of future revenues of still some EUR 340 million as well as for secure future cash flows of some EUR 190 million. Over the past 2 years, we have already generated substantial cash flows from these presold projects under construction, which has led to further strengthening our balance sheet. This now puts us in a position to exploit investment opportunities in the buyer's market for land. As usual, David will elaborate on our balance sheet ratios later in the financial section.

We have also done our homework on the approval side during the past years, and we have made good progress in further developing our pipeline despite the existing bureaucratic hurdles. As soon as the market reopens more broadly, we will be able to accelerate our sales significantly with an existing land bank consisting of projects that have already obtained zoning rights of around EUR 1.7 billion at the end of the second quarter. This does not yet include the progress we have just made on our project in Koln Bickendorf, which has a GDV of around EUR 650 million. We are ahead of schedule here. By the way, it can also be said that in general, that municipalities are now taking the issue of housing shortages more seriously and are more forthcoming in discussions with a stable partner as install.

We discussed in the previous call that we are observing a rising supply of attractive buying opportunities in the market. The land market in Germany needed some time for its price adjustment process after the start of the crisis. In 2024, price expectations of sellers were, in general, not yet at a level which looked attractive to us, but this has changed. Sellers have become more realistic, although we have to negotiate the deals, which always takes some time. The low competitive pressure on the buyer side for larger projects is creating opportunities. With our strong balance sheet, we are capitalizing on this. We discussed our acquisition pipeline in the past, which is now starting to materialize. Currently, we have 5 land acquisitions very close to signing. Signing is expected either in the coming days or in the coming weeks. The projects are spread over several metropolitan areas across the country, such as Nuremberg, Stuttgart, Munich, and the GDV in total is around EUR 350 million.

Furthermore, we have an extensive acquisition pipeline also with projects under exclusivity, and therefore, you can expect additional land transactions during the coming months. We are focusing on projects with a shorter duration, and therefore, such acquisitions should clearly help to strengthen our growth profile in the coming 2 to 3 years. I would now like to hand over to David for the financial section of the presentation.

Thank you, Kruno. Let me now walk you through our H1 '25 financials in a bit more detail, starting with our adjusted results of operations on Page 10. Our adjusted revenues are slightly below previous year's level as expected. This is mainly attributable to the slightly lower construction output and to the revenue contribution from an institutional deal in Q1 of the previous year. We expect higher revenues in H2 with a rising revenue contribution from new sales, including institutional deals. Also in the private customer business, the seasonality is typically stronger in the second half. Additionally, we can expect a rising impact from our various sales starts and the subsequent start of construction works, which is, as you know, the starting point for revenue recognition in our retail business.

We have started construction of our new Duisburg project, and we are on schedule for the construction start of our Lahnwarte project in Frankfurt and Gefylde near Stuttgart. We have continued to produce a very healthy gross margin of 25.3%. Our margin definitely remains in the benchmark -- remains the benchmark in our industry. Our cost discipline and cost leadership with our own construction management and the quality of our projects are important structural drivers for this. It is also worth mentioning that we have evidently applied prudent cost assumptions for our projects in an inflationary environment. We do not have any cost overruns. The projects are well within budget. Nevertheless, we expect a somewhat lower margin in the remainder of the year, in line with our planning. Our platform costs were slightly below previous year's level despite ongoing cost inflation due to a lower number of FTEs and lower LTI provisions.

Further down in the P&L, we saw a further decline in our net interest expenses. This was again largely attributable to the reduction in net debt of some EUR 55 million year-on-year. We expect a slightly higher tax rate in '25 lower earnings contribution from the Berlin-based equity joint venture project, which will be completed this year. Accordingly, we reported an adjusted earnings after tax of EUR 17.2 million, which, in our view, indicates that we are well on track to reach our full year earnings target of EUR 25 million to EUR 35 million.

Over to Page 11. As a result of the significant cash generation from presold projects over the last years, our financial leverage dropped to a very low level, which gives us ample headroom for growth. Our leverage ratios remained largely unchanged over the quarter despite the cash out flow for dividends. Our loan-to-cost ratio remained at a very low level of 12% at the end of June despite the comparatively low earnings level at the current trough of the earnings cycle. Net debt to EBITDA is also only at 2.8x. In light of our planned growth investments, we expect our leverage ratios to increase over the next 18 months. However, you can rest assured that a strong balance sheet will remain a key cornerstone of our business model.

Moving to the next slide. Over the past few years, we were able to demonstrate that our business model enables us to generate very attractive cash flows. While we still expect substantial cash contribution from our presold projects, we are now entering the investment phase. This does not only comprise land investments, but also the typical investments in working capital during the initial construction phase for projects catered to retail. As you know, we start construction after reaching a presales ratio of 30%. Accordingly, the cash flow rises over proportionately with sales progress. We expect that the cash requirements for the initial construction phase will largely offset the cash inflow from presold projects. The strong cash generation of Instone resulted in a liquidity position of more than EUR 270 million at the end of the second quarter, and the vast majority is available for land acquisitions. Due to the fact that the debt position contains mainly project-related debt, Instone has a significant net cash position on corporate level of some EUR 130 million. In addition, we have access to revolving credit facilities totaling around EUR 130 million, increasing our potential for land acquisitions. Chart 13 gives an overview of our financing structure at the end of Q2. There were no major changes during the second quarter worth highlighting.

Finally, coming to our outlook on Page 14. In light of the very solid H1 results and the positive demand indications, we are also confirming our forecast for the full year 2025. We expect a sales volume of more than EUR 500 million, revenues in the ballpark of EUR 500 million to EUR 600 million, a sustained high margin of around 23% and a net result in the range of EUR 25 million to EUR 35 million. With this, I would like to conclude the presentation and move on to the Q&A session.

[Operator Instructions] The first question comes from the line of Andre Remke from Baader-Helvea.

A couple of questions, please. Starting with the first on the land plot acquisitions. Could you provide some more details on that? What is the potential cash outflow you have to pay on the mentioned EUR 350 million project volume. What is the status or the average duration to turn them into construction starts? And what could be a magnitude of planned gross margins?

Andre, so looking at the projects, we have 2 already signed. One is -- will be signed today. And we plan to sign the other 2 in a couple of weeks. In addition, we have a significant portion of exclusivities where we currently invest a lot of work and plan to finalize those this year. So when you look at one example, I think that's when I take one of the projects we have signed recently, which is, from my perspective, a good example for profitability, et cetera. So one moment, I have to go into the numbers. So roughly, you can say the land price is between 10% to 20%, depending on the location. So if you are in a top city, then it's more like 20%. If we are in a suburban area, it's like 10%. The gross margin we are looking at is above 25%. So we have projects where we are reaching quite 2, 3 percentage points more.

And more important for us when we look at the current environment is what is the IRR we are targeting. And here, our initial target is becoming -- getting more than 20%. But here, the projects we are at a ballpark between 25% to 35% due to the fact that we are optimizing also when the land has to be paid, what is the work to be done. We have -- we are signing contracts partly where we are generating the building permit and then paying the land so very late. So here, we have the negotiation power to optimize the gross margin and the IRR. Is it sufficient as an answer for you?

Yes, absolutely, absolutely. And if you take an easy calculation for me as an analyst, 15% on average for the land on EUR 350 million means EUR 50 million you have to pay. But the question is, is it -- do you have to pay it right now or only, let's say, in 1 or 2 years from a cash flow perspective?

So absolutely, Andre, the payments vary. But typically, we have made favorable terms where we don't pay immediately. Some of them we pay beginning of next year, some of them we pay during Q4. So we are trying to push out the cash out from those land acquisitions as far as possible. But I would say within 1 or 2 quarters from the acquisition time. You also asked when those acquisitions, the EUR 350 million that we have mentioned when they will start the sales or construction period. All those projects are short-term we target to start the sales process during '26 and construction in '26 or '27.

Okay. Perfect. Second question is on the sale, you mentioned the EUR 55 million that you call it medium sized. Is this the kind of size you expect also for the potential deals under negotiations? Or in general, what are the deal volumes where the demand is higher from the institutional side? And who are the potential buyers if they are still the typical buyers or anything worth to mention here?

Yes. So we have, let's say, what we are targeting for the last quarter this year on sales, there are projects a bit smaller than the mentioned one. We have won a bigger deal we are planning. So I think the size between EUR 30 million to EUR 80 million is the ballpark, I would say. And the clients are more co-ops than maybe they have been in the past. So we have -- I think the institutional buyers classically from the past, like pension funds, for example, they are still on the sideline. So we have more interaction with co-ops who have the equity, who need to invest, who are familiar with the regional market. And here, we see a very positive traction currently.

Okay. The last question is on your guidance on the net income guidance. After the first half, you already achieved, let's say, almost 50% of the upper end of the range. And you are expecting an acceleration of institutional deals in the second half. It shouldn't be a consequence that such deals will contribute strongly also to earnings in the second half. So is it fair to assume that even the upper end of your guidance range seems to be conservative? Or where do you see the risk of this calculation?

So Andre, maybe just give you a couple of elements to this. Number one, we have provided a gross margin guidance of 23%. We are currently at 25%. So gross margin will come down in the second half of the year. Number two, we will have -- we do construction progress, which is a large part of the -- of our turnover of our revenues and sales have some impact, but a large part also comes from revenues that we generate through construction progress. And number three, I think sales volumes, as we just mentioned, when we will be able to complete them during the course of the second half is also difficult to say. It will most likely be in Q4. And depending on the timing, the amount of revenue recognition also will be different. So I think all those elements make us prudent to make any statement on where we will exactly land in terms of the CHF 25 million to CHF 35 million guidance we have provided.

Maybe one additional comment to that. Maybe you have seen the news flow. We have handed over a lot of projects, a lot of units in the last couple of months, projects which have generated a very high gross margin in the past. And then, of course, the mix currently is changing. We have the projects we are now selling are more like as you already mentioned, the remaining, let's say, portfolio is not at 25%. It's more like 20% to 22%. And this, in combination with the very strong margin projects, which have been finalized in the mixture, brings you to the 23% of gross margin. I think that's really important. Of course, the new projects gives us additional margin opportunities, but they are not really influencing the gross margin for this year.

And finally, Andre, one component to add is increasing interest rates, as we mentioned with the construction start buildup of working capital and the acquisitions, we will see that our net debt will increase, and therefore, interest rate in the second half will also go up.

Okay. If I may, a very last question, just for the record on your dividend policy. It was somewhat, let's say, disturbed by the last minute action of your -- some of your shareholders to pay more than originally planned. What should we expect going forward in terms of dividend policy? When will you have to do your mind whether you have to revise the existing dividend policy?

I think one -- maybe one point which is important to mention. Our big shareholders absolutely supporting our growth strategy. I think that's really important to say. And we have had the situation that in last year, we have generated significantly more operating cash flow than we have initially planned. So -- and then we have always had discussions with shareholders, the one who said, okay, you can pay out more dividends and you can stick to your growth plan. Others were saying, look, we want the company to invest all the money into growth and pay no dividend. So there are different, I would say, thinking about it. From -- as a management team, I would say that we want to further accelerate growth. We want to invest, but we also want to pay out dividends and dependent on how many, let's say, payouts do we have? What is the overall situation we are facing, then we will discuss this with our key shareholders. And then will we make a decision for the next AGM. Today, it's too early to discuss the dividend payment scheme for next year.

Yes, sure. I have no expectation that you will give me an answer today also in your press release. But in general, of course, this is kind of uncertainty what to expect from you as a company. So is it fair to assume that we only will -- that you will only provide further information on your general dividend policy at the beginning of next year. Is that right to assume?

Yes. I think when you look at -- and there, we have also to be very clear. So we have paid out EUR 10 million more, which is not really influencing our growth plan for the company. And also the shareholder -- the big shareholder has not asked for the maximum payout. So I think it's -- as I said, I think it's a discussion we have for years regarding what is the right dividend strategy. And we will take this and discuss it with our big shareholders when we have more clarity regarding our investments we have taken.

The next question comes from the line of Thomas Neuhold from Kepler Cheuvreux.

Actually, I have 2 follow-up questions. First, on the institutional business. Can you please provide more color on the total number, the total size of projects which are currently under negotiations? And can you maybe also provide some color on the institutional investors who are still not active in the market? What are the key concerns? What are the main topics you're discussing with them? And my second question would be on the potential project acquisitions, which you still plan to do this year. What is approximately the target for additional acquisition in terms of GDV this year?

Thomas, so we have currently 4 projects in institutional projects where we are discussing with potential buyers. And regards the, let's say, concerns of the, for example, pension funds, I think they have a portfolio. And this portfolio from the past is more dedicated to commercial investments. And we all know that office developments are not really easy. And the question for them is, of course, they have to refinance it. There's a discussion regarding valuation, et cetera. So I think there's a portfolio issue for them. When we talk to them, and I'm now saying cops who are still, let's say, part of our buying group, if I'm talking about institutional funds or pension funds, they are struggling with their portfolio. They are struggling, of course, a bit with the interest rates still. But from my perspective, if you talk to them, what attracts you in the real estate sector, they clearly say it's resi. They clearly say it's resi in the metropolitan areas. It's new build, but they have the issues to transform the investments they did in the last decade. And this is, from my perspective, one of the main reasons why they are current in the sideline.

And the second is in a market where the transaction volume is very low. And when you look at the mass and things they did in the past, which was also not really successful, I think they have the problem to be the first mover in the market. So I think this situation will also change when we'll see the transactions going up, then we will see the classical core money coming back, but our expectation is that it will take some time.

And the second question. The target GDV of acquisition, we have targeted EUR 2 billion for this and next year. with the EUR 350 million mentioned, we have made the first step. I think it wouldn't be too optimistic to get to the first EUR 1 billion this year. But I think it always depends project by project. It could be less, it could be more. I don't want to make an exact guidance for this year. But what I want to say is that we have a significant portion of exclusivities where we easily could cover the EUR 2 billion in total.

We now have a question from the line of Thomas Rothaeusler from Deutsche Bank.

A couple of questions. The first is actually on the institutional deal you've just signed. Just wondering if you could elaborate a bit on the terms.

So we have here -- but you have seen that we have not pointed out exactly where and what kind of projects. So we have here an NDA. What I can say is that the gross multiplier, so the gross yield is roughly at 4% starting gross yield is roughly 4%. And it's dedicated to -- and this is also important, it's not social housing. So it's really a free financed project, no social housing with a gross starting yield of 4%, which describes that we are satisfied with the result of it. I think the buyer can be satisfied, too. It's a very, very good project, very nice location. So it's always good when both sides are positive.

So that should be the level we should expect also for the next deals?

I think it's in the ballpark. So I think it's a good indicator, which is a realistic approach, always depending on what is the social housing portion, et cetera. But I think that's a realistic multiplier.

Okay. Helpful. The second question is on acquisitions. I mean, you speak of attractive acquisition opportunities. It sounds like you can do. Yes, on acquisitions, I mean, you speak of acquisition opportunities. It sounds like you can do bargains in this market. Just wondering if you could elaborate on the terms, please, maybe in terms of land price compared to previous years. And as I understand, we should expect improved margins on these projects. Is this correct?

What we currently see is that we are -- with our, let's say, negotiation power, we are getting to 25% plus, yes. I don't want to be here, let's say, too optimistic for the couple of next years because when the market starts to let's say, to work, then this is also an influence on prices. But what we currently see is that we are able to generate higher margins than the 25% as a target margin. Regarding the type of projects, we are focusing on 2 or 3. The short-term oriented, we -- the EUR 350 million, I think, is a good indicator. So this is the result of this, let's say, focus. And the second type of projects are bigger projects where we are benefiting from the overall situation, the pressure in the market where we can agree with the seller terms where we are paying in face always with a target of IRR being above 20%. And this is in our, let's say, current portfolio easily achievable.

So an additional comment, in every project, a lot of work. So these are not really low-hanging fruits. It's a lot of work you have to invest because you have to change the design, maybe you have to discuss it with the municipality et cetera, et cetera, because the former strategy of the project maybe was wrong, and now you have to replace this through a strategy which works, and this takes time. So this is the reason why we are now seeing the results of it of the big, let's say, work we have done. But that's the market. So Germany, price correction very slow and all the projects complex, all the projects have to be shaped and this takes time.

The last question is on leverage. I mean, you indicate an increase basically on your increased acquisition activity. What level should we expect by next year when you should reach the EUR 2 billion GDP, which you target to acquire?

So we will, on the LTC level, move to above 30%, but we will always stay below 40%. So we'll move into the region of 30% to 40% on an LTC level. And in terms of net debt to EBITDA, there it depends a bit on where we end up in terms of our earnings pickup next year. Therefore, to give you an exact number is difficult.

We now have a question from the line of Manuel Martin from ODDO BHF.

Yes. One question from my side, please. It's on financing conditions. Maybe you can give us a bit your impression on financing conditions in the market of project development. So what do you see for the sector? What do you see for Instone? And if the financing conditions evolve in a better way, do you think that purchasing opportunities could fade away as some of the sellers could be saved through that?

So I think we have a very differentiated market still out there, Manuel. We have a lot of our competitors that are still not able to secure financing on the project level even and not thinkable on the corporate level at all. So I think there, it depends on who is asking for financing. We still see that we are able on every project finance to secure financing within the terms that we have seen in the past. So terms have not materially changed in terms of margins that we pay. So on the project finance, it has come down a bit. On the corporate side, the market is still difficult to generate attractive margins. We feel comfortable with our financing we have. But we also at the appropriate time, we will be able to secure also financing on the corporate level again.

I think the interesting thing will be how long the banks are willing to prolong existing loans. I think this is something we are really looking at because it could mean for us additional opportunities, investment opportunities in the market. I think what additionally could cause some trouble for the one or the other competitor is we are showing our results with a percentage of completion, which means that you have always the current situation showed by us. The competitors are mainly balance local GAAP, and they have shown still positive results because these projects have been sold in the past and with completed contract model, you show very good results, but this overall situation is a different one. So we expect that many companies will make losses, and this will further bring in pressure on banks to think about the financing. So we will be -- I think it will be a very -- still a very interesting time period in the next 6 to 12 months when you look at overall the developers in Germany.

[Operator Instructions] The next question comes from the line of Philipp Kaiser from Warburg Research.

Congrats to the solid figures. Just starting with an understanding with regards to your gross margin, you already elaborated that you expect a lower gross margin in the second half of the year, finally reaching the 23% overall. The same mechanism was last year with also a very strong first half and then a lower second half. Is it just a coincident? Or is there seasonality or mechanism behind those different half of the years?

Philipp, I think that's a coincidence.

Okay. Perfect. Then my next one is on the retail sales business, which accelerated further in the first half. Do you expect the business to further accelerate also in the second half of the year? And are there any bottlenecks you see which might dampen potential growth, either on the buyer side or on the project side?

So we are preparing another 5 projects into the sales start, and we are here absolutely in line with our, let's say, planning. So the projects are prepared by getting the building permit, et cetera. So therefore, there is no risk here. Regards overall capacities, et cetera, I think the market, when you look at the appetite of the buyers is extremely strong. So the people, when they understand the scheme, they are all affected. So here, I think the demand is there, and we will find the buyers. Regards all the other capacities, I don't see here bottlenecks. So we are absolutely in plan here. And I see from this perspective, more chances than risks.

Okay. Perfect. Yes, that's also kind of my thoughts on that if you -- I mean it definitely depends on the location of the region you look at, but it's kind of hardly -- it's kind of hard to get any such project. So if you would market in 2 more or 3 more, you would definitely find buyers. It's kind of the right assumption. So it's like on the project side is kind of limited the only kind of bottleneck you probably see it's hard to call bottleneck, but yes, if you would go into the market with more of these projects, you would definitely find even more buyers for that.

Maybe give you just 2 points to that. One, I think we already mentioned in the past, the highest tax payers, a number of people are more than EUR 4 million in Germany. So we're only tapping so far a very limited part of those. And number two, I think the market awareness of this product is steadily increasing by us selling more. And I think the interest we note is increasing. So I think rather than reaching a capacity ceiling, we will see quite a long time of where you see that the interest levels will increase because the awareness will increase.

I think additionally, what helps us when you look at the Duisburg project, why is Duisburg so, let's say, successfully launched. When you look at the EUR 5,000 per square meter, we are able really to produce cheap. And this helps us now where we can offer a product generating a decent margin, but also, let's say, offering a product in a price level where -- which is attracting the people to buy. So here, we clearly have advantages in the competition to many others.

Okay. Perfect. That's crystal clear. And then with regards to your sales volume guidance of EUR 500 million, based on this dynamic in the retail segment, is it fair to assume that it will end up a 50-50 split in sales volume? Or will eventually when all the Insti deals close, the Insti have a larger share of this more than EUR 500 million?

I think the 50-50 could be quite a bit, let's say, more to the retail business. So we think that looking at overall traction, I think it could be also 60-40, 60% retail and 40% institutional.

Okay. Perfect. And the last one is with regards to the acquisition pipeline. So I mean, there are still some variables out there, and you already secured EUR 350 million GDV talking about the EUR 1 billion probably for each year. So is EUR 150 million in just pure investment volume still a fair assumption for the time being?

Yes. As Kruno mentioned, I think prices depending also on where we stand in terms of progress done on the building permit, vary between 10% and 20% of the GDV.

We now have a question from the line of Thomas Rothaeusler from Deutsche Bank.

Just one follow-up actually on the tax incentive product. It almost sounds like you are the only player in the market able to offer ready product here. Is this right? Or what would you say? How would you describe the competition there?

I think -- I wouldn't say that we are the only one who is offering the product. I think we will see more of this coming. And we -- I think the -- it's also related to the necessities to launch such a product. So in May last year, we have seen this change. But the QNG 40, which is necessary this energy standard, all the developers needed time to reshape their design to this. Additionally, you need a building permit to start the sales for the buy-to-let investors, and this also needs time. So we will see more product coming but clearly also influenced by overall financing situation. So I think that there is a lot of -- or let's say, there is a lot of developers who can't really finance the start of the construction. So we see here an influence by the overall financing situation, which helps us, of course, because we are able to get the financing, we are able to start the projects, we can start the construction, et cetera. So we have here further advantages in comparison to many of our competitors.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Burkhard Sawazki for any closing remarks.

Thank you for your participation. If you need further information, please do not hesitate to contact the Instone IR team. Many thanks. Goodbye.

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