Branicks Group AG (0QGG.IL) Earnings Call Transcript

Dear ladies and gentlemen, welcome to the presentation of the full year figures 2020 of DIC Asset AG. Today's call is being recorded. I now hand you over to the host, Sonja Wärntges, CEO of DIC Asset AG. Please go ahead.

Thank you, Emma. Good morning, everybody. Good morning, ladies and gentlemen, and a very warm welcome to DIC's Q4 2020 Conference Call. Today, I'm joined by my colleagues Patrick Weiden, CCMO of DIC Asset; Dirk Oehme, our Head of Accounting; and our investor relations team, headed by Peer Schlinkmann. As usual, we will give you a quick presentation of our results for the full year 2020, followed by a Q&A session. Dear audience, ladies and gentlemen, 1 year ago, I presented you very good results for 2019 and our growth plans for 2020. Then the pandemic extended and a lockdown came. We have managed the situation and provided an adjusted outlook for 2020 beginning of April. Today, we show you we have reached our targets. We have more than fulfilled what we had promised, and more than that, we have set up the basis for the ongoing growth story and the next level for DIC. I'm very proud of my team who has made it happen. And this brings us to the perhaps most important number of the year: Along with a new transaction record of EUR 2.5 billion and the takeover of RLI at the end of the year, our assets under management have passed the EUR 10 billion mark at the beginning of 2021. And therefore, the next level is set with a new midterm target of around EUR 15 billion for the assets under management. On Slide 2, you see a brief overview of our highlights of 2020, which I will present to you in detail later. Our letting teams performed very strongly and signed a total of around 269,900 square meters on site, which is an increase of 28% year-over-year. These lettings will further secure long-term cash flows in both of our business segments. Along with this result, we were able to further reduce our EPRA vacancy rate in our Commercial Portfolio by 110 basis points to 5.4%. The outcome of the Institutional Business segment grew significantly as a result of the performance of our 360 performance platform. We initiated the biggest fund with a target volume of EUR 1.6 billion, and we increased the real estate management fees by 27% to EUR 79.7 million. On the back of the strong growth in 2020, our assets under management reached EUR 9.6 billion by year-end. Including the strategic expansion in the asset class logistics at the end of the year, we even reached our growth target of EUR 10 billion at the beginning of the new year. These positive results and activities again led to an FFO increase, a new record level of EUR 96.5 million, including all temporary effects from the COVID-19 pandemic in the last year. According to the strong performance and the fact that we were able to further enhance the strength of our business platform, we propose an increased dividend of EUR 0.70 per share to our shareholders. We will once again give our shareholders the choice to receive a scrip dividend. Based on the year-end closing price, the dividend yield for 2020 is around 5.2%, one of the highest among the listed companies in the DAX indices. Ladies and gentlemen, I just want to quickly highlight the specifics of our 360 value creation and why it generates superior returns. We have strongly grown our real estate platform in the German market and prepared ourselves to create value for our clients and shareholders every day along the value chain and with our strong network. Transact, operate, develop and match, these are the main drivers for steady income streams and ongoing value creation. For controlling and financial reasons, we show the results in the 2 business segments. Also we know that we create a surplus in combining the 2 segments using the synergies and scale business, in circles. Creating values and generating different types of steady income streams, we reach higher levels, like a spiral, during the lifetime of the assets. This is what we call 300-degree (sic) [ 360-degree ] value creation with dynamic performance. Now let's start the presentation of the financial results with a summary and outlook for the commercial real estate market in Germany. 2020 and the outbreak of the COVID-19 pandemic left its marks on the transaction and letting market. However, the transaction market, with roughly EUR 56 billion, in 2020 still delivered a good result in line with the years 2015 to 2018, thanks to a good first quarter and even stronger last quarter. This once again demonstrates investors' consistently high level of confidence in the German real estate market. Having a deeper look into investors' most sought-after asset class in 2020. Office properties have still been the #1 choice, with an increasing focus on the core segment. Retail properties and hotels are the asset class which were most impacted by the COVID-19 pandemic, with the exception of supermarkets and discounters. That have been of high interest due to their systemic relevance as they ensure the local supply of everyday goods. And as expected, we saw a strong and increasing demand for logistic properties. The asset class profited from the way in which COVID-19 intensified the trend towards online shopping together with an increased requirement for goods logistic and a higher demand for space in local and regional distribution centers. So what can we expect from 2021? We expect the rental markets, particularly office rental markets, to recover in 2021. According to the experts, the weighted vacancy rate in the top 7 cities grows only one -- only slightly to 3.5% at year-end 2020. On this level, we are still in a situation of a more landlord-friendly market. However, the demand in 2021 will also depend on the further evolution of the pandemic. With the prospect of widespread vaccination against COVID-19, followed by a consistently economic recovery, we expect that the take-up in the letting markets will return to normal levels as companies become more confident again and restart to think about relocation and expansion plans. On the transaction market, it is very likely that investors continue to clearly differentiate between the asset classes when assessing the risks of an -- investments. In the light of a persistent low interest rate environment, the demand for core real estate will stay on a high level. And finally, some words on the working from home. Are we afraid? No, definitely not. It is certainly good to have the flexibility for mobile working, thanks to further digitalization of our offices and our day-to-day processes, but it's not that we are facing a radical disruption of working in a traditional office setting. According to a recently published study from the German Economic Institute of Cologne, only roughly 6% of the surveyed companies plan to reduce office spaces in the next 12 months, mainly bigger companies with at least more than 250 people. 2/3 of the surveyed companies do not want to increase the levels of working from home compared to pre-corona levels. All in all, given the very low vacancy rates in the office market so far, this should not lead to any sharp corrections. Let's now take a look at the performance of our operating units and the strengths of our property management platform. Last year, our letting activities were focused on extending existing lease agreements. Overall, our letting teams have been very active and signed lease agreements for approximately 200,070 (sic) [ 270,000 ] square meter. Renewals accounted for 71% of the total signed letting volume. The contracted rent amounted to EUR 33.2 million. On the lease maturity profile, only 4% of the rents in the overall portfolio are due to expire until the end of the year 2021. Roughly 72% have a remaining term until 2025 or longer. As already seen by the end of the first 9 months of 2020, the like-for-like rental growth between the 2 business segments were very different. On a like-for-like basis, rental income was up 1.9% across the entire platform. In Institutional Business, the plus of 4.3% was mainly driven by a strong reduction of vacancies, while the 3.1% decline in the Commercial Portfolio is mainly due to rent adjustments for the Kaufhof properties in summer 2020. Just a year ago, I was pleased to report a transaction record of over EUR 2 billion. Now looking back to 2020 and the special situation we all had to cope with, the roughly EUR 2.5 billion transaction volume is not just another record after a record for DIC. It is a result of hard work and a self-created network among our growing investor base who puts their trust in us every year. Throughout the year, our assets under management increased significantly from EUR 7.6 billion to EUR 9.6 billion, reflecting the high acquisition volume in fiscal year 2020. This does not yet include a strategic expansion in the asset class logistics. Including the takeover of RLI Investors, we reached the EUR 10 billion mark beginning of January 2021. In total, we have acquired 16 properties with a total value of more than EUR 1.8 billion and sold 10 properties with a total value of more than EUR 600 million. In our Commercial Portfolio, we sold 5 properties with a total sales volume of around EUR 242 million, included -- including the former repositioned Wilhelminenhaus in Darmstadt which was sold to the new investment vehicle we have launched in December. With 5 sales in the Institutional Business, particularly for maturing DIC office balance funds, we also generated attractive capital gains for our clients in the Institutional Business. On Slide 7, we just give you an overview of the additions in the Commercial Portfolio last year, most of them we already presented to you in our last conference call. The SAP tower property in Frankfurt, built in 2018 and equipped with a LEED gold green label, is being used by SAP. The weighted average lease term is approximately 8 years. The high-quality office building in Hannover has a total space of around 9,350 square meter and is being leased by the direct bank ING-DiBa. The weighted average lease term is approximately 9.5 years. GATE NEUN in Leinfelden-Echterdingen, which we acquired in September for around EUR 72 million, is a multi-tenant office building in an ideal location right on the autobahn 8 in the Stuttgart metropolitan area. This property is being refurbished and is already generating rental cash flows from an existing tenant. 2 further tenants have been confirmed and will move in to this space in 2021. The project will be completed during the second quarter, and we expect it to be fully occupied by the end of 2021 at the latest. In December, we acquired a logistics property in Bremen for around EUR 25 million as part of the strategic expansion of our logistics segment. With approximately 8,500 square meter of lettable space, the property is situated in an attractive micro location in Bremen's Airport-Stadt north with excellent regional and nationwide transport links. The user is a subsidiary of the, Airbus Group. The property is already earmarked for a new logistics fund to come. Until then, we will benefit from the rental income during the warehousing phase. Let's also have a brief look on selective acquisitions we bought for our institutional clients in 2021. Thereby, we continued to mainly focus on acquiring office properties with strong cash flows. By the way, 12 of our acquisitions were made in December. In the first quarter of 2020, we transferred the Infinity Office project development in Düsseldorf to a new investment vehicle which we initially acquired in a forward deal 2018. After the completion, we transferred the property into our warehousing and structured a club deal for 2 renowned institutional investors with a total investment volume of EUR 175 million in the first quarter. In September, we acquired LOOK 21 in Central Stuttgart for around 120 -- EUR 122 million for the GEG Public Infrastructure II. This new build property with around 11,200 square meter of lettable space is fully let for 12 years to a blue chip tenant from the infrastructure sector. Also in September, we acquired the new HangarOne building in the dynamic Köln-Ossendorf office market for around EUR 38 million for the GEG Deutschland Value I managed-to-core fund. After being completed, this modern property has around 8,500 square meter of lettable space; and is 60% pre-let to blue chip tenants from the specialist industrial materials, flexible office and IT consulting sectors. The weighted average lease term is around 9 years. In a very busy December, we signed several transactions for the Institutional Business. One of the biggest has been the acquisition of the Goldenes Haus property in Frankfurt with a volume of around EUR 192 million, a fully let landmark office property in Frankfurt City West with around 33,000 square meter of lettable space. The Magazinhof in Kassel, with around 15,000 square meter of lettable space, was purchased for EUR 65 million for the GEG Public Infrastructure II. The city campus near the Kassel-Wilhelmshöhe ICE railway station is fully let on long-term leases to 3 blue chip public sector tenants, including the Landesbetrieb Bau und Immobilien Hessen. The weighted average lease term here is around 15 years. The multi-tenant property Galilei property in Mannheim was acquired for the GEG Deutschland Value I, with a total investment volume of EUR 39 million. The around 9,300 square meter of lettable space is mostly let to agricultural chemicals manufacturer EuroChem and internationally -- auditing firm Deloitte. Now looking at the operating performance of the individual business segments. You see on Slide 9 the development of the key performance indicators of our directly held assets of the Commercial Portfolio. Thanks to our active management and focus on portfolio quality, we reduced the EPRA vacancy rate by another 110 basis points to 5.4%, while the WALT increased to 6.5 years. The average rent increased by 4% to EUR 10.81 per share (sic) [ per square meter ]. Due to higher disposal activity and corona-related rent reductions, the annualized rental income decreased to EUR 95.8 million. Our Commercial Portfolio showed a strong resilience in the last year. Due to the tenant GALERIA Karstadt Kaufhof as one of our main tenants in the retail portfolio, we saw a negative like-for-like valuation effect for the asset class retail of around 2%. This negative effect was overcompensated by significant positive like-for-like valuation uplift in the asset classes office, logistics and mixed use. All in all, we achieved a total valuation effect of roughly EUR 66 million or 3.4% in the Commercial Portfolio. Going forward, we stick to our focus on offices and -- well as planned increased our investments in the asset class logistics. The growth story continued. In our Institutional Business, we see an ongoing high demand for our services and investment solutions. The assets under management grew there by 33% from EUR 5.7 billion to 6 -- to EUR 7.6 billion. Including the acquisition of RLI Investors, the assets under management in the Institutional Business segment stood at EUR 8.3 billion at the beginning of January. One of the most important milestones in the year was the launch of the largest investment vehicle by volume in the company's history for a club of national institutional investors in December. The investment focus of this new fund, with a target volume of EUR 1.6 billion, is core office properties with long-term leases and first-class tenants. DIC has set up a seed portfolio with a volume of around EUR 780 million, including high-quality assets in central locations within the leading Rhine-Main metropolitan area. Part of the seed portfolio is also the Wilhelminenhaus in Darmstadt, which has been part of the Commercial Portfolio and was fully refurbished and upgraded by DIC. Through the disposal, we were able to crystallize the value of the successful redevelopment. All properties are fully let, with a weighted average lease term of over 18 years. The equity amount of EUR 800 million for the targeted investment volume of the fund was already fully subscribed by the issue date, and roughly half of it was used to finance the seed portfolio. Our investor base grew to 144 names by year-end. With more than EUR 700 million committed equity still available for discretionary investments through our platform, we can reach an investment volume of around EUR 1.3 billion in 2021. Ladies and gentlemen, at the beginning of last year, we decided to further diversify our income streams and broaden our portfolio by focusing on logistics. COVID-19 has stimulated a trend towards e-commerce and revived the discussion about the complexity of the global supply channels. Therefore, we expect an increasing development of local and regional distribution centers, which will also lead to higher demand and increasing attractiveness of the asset class logistics in the future inside and outside of Germany. In December, we acquired 100% of the shares in RLI Investors as well as a 25% noncontrolling interest in Realogis for a purchase price of around EUR 42 million. Through the acquisition of the second largest independent asset manager in logistics sector, we have gained experienced logistics experts and a strong brand in this industry. Realogis is an important player in the lettings and investment business for logistics properties in Germany. This additional investment has provided us with a compelling basis for collaboration, brings us even closer to the logistics market and enables us to use the added specialist knowledge to effectively implement our growth strategy in the next months. We will further strengthen our real estate platform through a combination of the fundraising capabilities of DIC assets with the product expertise of RLI Investors. As a result, we can offer both of our institutional investors and RLI investors existing and -- a broad spectrum of opportunities to invest in various asset class. Our income streams showed a strong resilience and were not significantly impacted by the COVID-19 pandemic. Having stabilized and minimized COVID-19-related tenant credit risks through a proactive tenant dialogue in the last year, we were able to keep our gross rental income stable at EUR 100.7 million. Since the half year results and due to COVID-19, we recorded higher valuation allowances for rent receivables to account for potential rent losses from deferred rents in the profit and loss account. At the end of the year, we adjusted the additional valuation allowances to EUR 3.2 million. This reflects the potential risk of additional rent losses in future periods as a potential result of a further economic downturn and resulted in a lower net rental income of EUR 82.2 million compared with EUR 87.9 million in the same period of the previous year. Without these higher valuation allowances, we would have achieved a comparable NRI margin of 85%. The real estate management fees have shown a strong increase of 27% to nearly EUR 80 million and thereby more than compensated the effects of the lower net rental income. Both main fee elements, transaction as well as asset and property management fees, achieved significant growth versus the previous year. In addition, we generated a sales profit of EUR 32 million and a profit from associates of EUR 11.4 million from our core investments. The reduction in profit from associates is linked to the discontinuation of our former TLG investment, which we sold in 2019. In total, this was also overcompensated by the strong fee growth from our growing real estate platform year-over-year. Despite special circumstances, our FFO once again reached a new record high of EUR 96.5 million, an increase of 2% compared to the previous year. The main drivers included the increased real estate management fees and the reduction in interest expenses resulting from the ongoing optimization of our financial structure year-over-year. The increase in operating expenditures is mainly due to the first-time consolidation of GEG for the full year compared to the previous period. To take into account our accounting method cost accounting and to illustrate a full picture, we also showed FFO II for the first time. We do not have a fair value accounting and therefore do not have value gains and losses in our profit and loss. Besides, we sell the assets. Therefore, it makes sense to look at this FFO II, which includes the sales profits we achieve when we realize the value creation. For 2020, the FFO II reached EUR 128.5 million after EUR 135.5 million in the previous year. How does the FFO develop in the individual segments? If you look at the segments in detail on Page 15, with EUR 47.3 million, the FFO of the Commercial Portfolio is stable compared to last year. The COVID-19-related higher valuation allowances were offset by lower operational expenses and improvement in the net interest result. In the Institutional Business segment, we saw a strong increase of the real estate management fee by 27%, as already mentioned. The operational expenses grew also by EUR 5 million, which is due to the full year inclusion of GEG for the first time. In the previous year, the TLG dividend of EUR 12.9 million was still included in the share of the profit of associates. Without this dividend, the share of the profits from associates improved by EUR 6 million to EUR 11.4 million. In total, the Institutional Business segment shows an increased FFO contribution of EUR 49.2 million in the full year results. And what happened on the valuation side of our business model? The stability and resilience of our business model is also reflected in our adjusted NAV. Shareholders' equity per share saw a net increase of EUR 0.30 per share to EUR 13.66 as a net effect from the profit for the period, cash dividend and capital increase. Adding the fair value adjustments for our Commercial Portfolio, the EPRA NAV stood at EUR 17.49 per share. The adjusted NAV, which takes into account the full value of the Institutional Business segment, was at EUR 22.04 and, despite a higher share amount of roughly 8.3 million, only 1% below previous year's adjusted NAV per share figure. On the next slide, I just want to give a quick update on our financial structure. Our average cost of debt remained at a low level of 2% like in the previous year. Our ICR rose by 48 basis points to 557% due to improved net interest result. Thanks to the increased valuation of the Commercial Portfolio, our loan-to-value was lowered to 44.5%. Including the full value of our Institutional Business, our adjusted LTV stood at 39.2% at year-end. Looking at the maturity profile for 2021, we do not face any major upcoming maturities. Nevertheless, in the course of 2021, we will work on the refinancing strategy for the maturities in 2022. With EUR 371 million cash at hand, we have also sufficient firepower available to seize short-term opportunities. Ladies and gentlemen, before I present our guidance for the fiscal year 2021, I would like to emphasize what important decisions we made in the last year to originate the next level of our growth story. Being close to our tenants and clients is part of our strengths. Especially in the COVID-19 pandemic, we experienced how important it is to maintain a close dialogue and relationship. That's why we decided to open 2 new branches in Cologne at the beginning of 2020 and in Stuttgart at the end of the year, which means we now have a presence in all of Germany's top 7 cities. ESG and digitalization are key focus areas for the future both within and outside the real estate industry. DIC reports on ESG since 2011. We created several key roles to ensure that these topics are more and more embedded in the DIC Asset's overall strategic direction and future decisions. Beginning of 2021, we were delighted to a further position of the newly created Head of Sustainability. The focus of this role is to step-up ESG activities across the group and implement a more comprehensive sustainability strategy for all group companies. Our head of digital development drives further the standardization and automatization of the group's operating and administrative processes. In light of the planned expansion in the asset class logistics, we have set up a specialized logistics team in the investment and fund management and filled the position of the newly created Head of Logistics. With RLI Investors onboard, we have already had platform now to launch quickly new products in the logistics market. And finally, we further strengthened the management team of our GEG with the addition of 2 well-known experts who have both a proven track record in raising additional funds from national and international institutional investors and in opening up new opportunities in the asset management market. Last but not least, after a strong finish in the year 2020, we are well prepared and ready for the next level of our growth course. Having reached our EUR 10 billion asset under management target beginning of this year, our next new midterm target is EUR 15 million assets under management -- EUR 15 billion, sorry. We will achieve this goal by further servicing existing mandates and through the launch of new investment vehicles. And what does this mean for our goals in 2021? In 2021, we intend to grow our Commercial Portfolio by EUR 100 million to EUR 200 million, with acquisitions of EUR 200 million to EUR 300 million and a sales volume of around EUR 100 million. In the Institutional Business, we will deploy the committed equity of our investors as planned and focus ourselves on raising new equity. Our acquisition target for the Institutional Business lies between EUR 1 billion up to EUR 1.5 billion. Roughly EUR 200 million to EUR 300 million are planned to be sold from maturing funds. In the Commercial Portfolio, we expect to generate gross rental income of roughly EUR 98 million to EUR 102 million. For our asset management business, we expect an increase in real estate management fees to EUR 94 million to EUR 104 million. All in all, we expect to generate an increase of our FFO to a level of EUR 106 million to EUR 110 million, means a growth of more than 10%. Ladies and gentlemen, times are challenging around the club for the real estate industry and also for us. Our business model offers unique advantages, and it will definitely continue to prove its worth in 2021 and beyond. Many thanks for your attention, and now we are ready to take your questions.

[Operator Instructions] We will now take our first question from Steven Faserts (sic) [ Stefan Scharff ] from SRC Research.

Sonja, it's Stefan here from SRC Research Frankfurt. I have just one question, after this very good year, about your outlook and about the logistic asset class. Can you go a little bit more in detail about your growth plans here? And perhaps an add-on question: I think there is some cross-sell potential as you might offer the RLI Investors more office products from GEG; and the other way around, the GEG investors more in the logistics industry.

Stefan, thank you for being on the call and for asking the questions. Yes, definitely we have plans for logistics this year, so we at the moment set up a new logistic fund, DIC expertise in creating equity from investors and the expertise of RLI logistic experts for the assets. And so the fund will have a target volume of roundabout EUR 350 million to EUR 450 million. So that's the goal there. And we also expect the Commercial Portfolio to grow in the logistics area this year, I would say, of around, yes, EUR 50 million to EUR 100 million, having in mind that logistic -- as it's normally much more smaller in volume of euros than office, this is a big number for year 2021, but we have a pipeline in place and so we are sure that we'll make this happen now. And on the investor bases -- sorry.

Yes, the cross-selling.

Yes, the cross-selling, yes. We have complementary investor bases. So the RLI investors are different to our investors. Some are different. Some are the same, but with having on the one hand the expertise on both asset classes in place now and, on the other hand, the different investor bases, we see complementary and cross-selling business here. And I think also the investors, what we have first, see this in the same way, so that we are confident to make them lucky, so to say, and to grow our business in the segments.

Okay. The Commercial Portfolio was just a little bit up to EUR 2 billion. I think it would be -- would have been a bit more without selling the Darmstadt building to the new fund, but if your plan -- I guess your plan is to grow the Commercial Portfolio a little bit more this year than in the last year.

Yes. So Darmstadt is included in the Commercial Portfolio at the moment. So it will go out in January -- or it has been -- gone out, yes, but not in the numbers of the end of the year. So it was in the sales volume last year in the EUR 242 million for the Commercial Portfolio, but it's still in the assets under management in the Commercial Portfolio. So it's a little bit different in the 2 -- difference in the 2 numbers, yes. The -- for this year, we have said we will sell additional EUR 80 million to EUR 100 million, roundabout, yes. And we will grow the Commercial Portfolio by acquiring roundabout EUR 300 million, yes. Our acquisition profile for the Commercial Portfolio is a little different than the acquisition profile for the Institutional Business segment. So we are focusing on logistics, as said. We are focusing on value add to create value here on our -- with our own team in the Commercial Portfolio. And the third part of the acquisition profile is to acquire assets a little bit like more like SAP with green label, with core-plus status so to have also little change in the mix of the Commercial Portfolio. As said, we are focusing on ESG strategy, and therefore we are preparing a own portfolio for the future. And therefore, we think the mix of these 3 segments in the acquisition profile is a perfect mix for our own development.

Okay. The EUR 15 billion target, would you say it's about 3 or 4 years, let's say, '24 or something, to reach it?

Yes. We said it's a midterm target, means within 3 to 5 years. And I think, if you challenge the numbers, you can see with a growing portfolio in Commercial Portfolio of roundabout EUR 200 million; and a growth story for the Institutional Business of roundabout EUR 1 billion, plus or minus. We see the split of [ 1 to 4 ] exactly shown here in the growth story of the next 3 to 5 years.

We will now take our next question from Jochen Schmitt from Metzler.

I have 2 questions. Firstly, could you please comment on the minority earnings which you booked in Q4? Was this disposal related? And secondly, what's your expectation for the tax rate going forward given the anticipated rising FFO contribution by asset management? These are my questions.

Jochen, thanks for the questions. I'll start with the last question. Yes, the tax run rate will be roundabout 22%, we expect. And the first question, I've forgotten.

Minority, the minority...

Minority interest, yes. This is definitely a very interesting and the right question, as you have very detailed looked at it, yes. It's from our so-called HI portfolio, where we have sold Darmstadt. And this is the partly -- yes, partly gone to the minority so that we have reduced our own per share profit here to the minorities, yes.

We will now take our next question from Manuel Martin from ODDO BHF.

Sonja, 1 -- 2 questions actually from my side. The first one is the -- on your collection rates. I suppose the collection rates are fine during pandemic. Maybe you can elaborate a bit on that and on the outlook on collection rates. Second question would be on your dividend policy. The dividend seems to be quite generous. It's something like 80% payout ratio. Could you elaborate a bit on that? And maybe, I guess, you have a guidance how it could develop in the future. Would it be as generous as this year?

Manuel, yes, perhaps we start with the dividend. Yes, it's generous, but we see ourselves as a dividend-paying company. That's what we have said in the past and that's the -- definitely the strategy for the future. The payout ratio, if you look at FFO, is a 57% payout ratio. And as I have always said in the past, the dividend -- or we introduced it as a payout ratio for the FFO, but at the end of the day, it is driven by our local GAAP results, so to say, HGB. And therefore, we said EUR 0.70 is exactly that's what we get out from our result on a local GAAP basis compared to the past. And so we said we want to [ such as ] EUR 0.70. Also it is a little bit more than 50% payout ratio. And we will continue with the strategy in the future, yes. There is no need to change. And if you look on our forecast or outlook for 2021, you see that we drive the FFO. We drive our result and we drive the underlying income streams, so we have no doubt that we stay with our dividend policy for the next years. Coming to the collection rate of the -- of our receivables. The collection rate in December was nearly -- or was the same, as we didn't have the second lockdown here. In January, it went a little bit down, but it is still more than we saw in the first lockdown. So we had now 92%. And with February, we have nearly half of the receivables which should be paid beginning of February. The other ones are coming in between the 10th and the 15th of February. We see even higher collection numbers, so it is definitely better than the first lockdown. This is what we see now. And we have much more detailed and much more sophisticated discussions with our tenants, so I think we will come up with a higher number. And at the end of the day, we have in our forecast some reserves. So we -- at time being now, we think the reserve is more than generous for the year 2021 for this second lockdown. Not knowing what's going on, but we expect, as I said and as we have written it in our annual report, we think that the economies in Germany is coming back in the second half of the year. And that's what we reflect in our numbers, and as far as we see it now, this will come.

We will now take our next question from Kai Klose from Berenberg.

I've got a question on Page 21 of the presentation regarding the operating expenses. The level of 2022, is this -- 2020, is this something we should expect also for the current year? Or is there a slight increase we -- expected given the enlarged size of the group?

Kai, the run rate is roundabout [ 57 ]...

[ 57 ]. And -- yes. And then a question on the logistics, on your strategies regarding logistics properties. Just to clarify: You expect to acquire properties for the funds as well as for the Commercial Portfolio.

Definitely, yes.

And where do you see the advantage to diversify the portfolio -- to diversify the sector split of the Commercial Portfolio further?

Yes. As I said, the general advantages from logistic do not differentiate between our own portfolio or the Institutional Business. And so when you look in our split in the asset classes, you see the mixed-use assets, yes. So we have started to show this asset class last year because we think that's one of the key indicators for the performance in logistics for the future, these last-mile urban logistic, how you will call it, yes. And we have seen this -- yes, this challenge or this...

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