Noratis : Financial report first half-year 2023

Noratis AG performed as expected in this challenging environ- ment. With its focus on affordable housing, the operating business was able to benefit from the high demand for residential space. This is reflected in rental income, which rose by 11 % to EUR 15.6 million after EUR 14.0 million in the same period of the previous year. In addition to the expansion of the property portfolio during the year, successful asset management and rising rents are also noticeable.

By contrast, the volume of transactions declined significantly, as expected. Noratis AG purchased only 18 units in the first half of 2023, compared with 286 units in the previous year. Although a large number of potential properties continued to be offered, fewer of them met Noratis AG's current acquisition expectations than in previous years due to the changed market environment and higher interest rates. A total of 176 units were sold in the period under review, down from 268 units in the corresponding period of the previous year. This resulted in a significantly lower result from sales proceeds than in the previous six months.

In view of the price declines observed on the market, Noratis AG had its own real estate portfolio valued externally at the end of the first half of the year. This resulted in write-downs of around EUR 3.8 million on the properties held for the long term and those classified as current. Together with the lower earnings contributions from the property sales, this led to a significant decline in earnings before interest and taxes (EBIT) of EUR 2.6 million, after EUR 11.9 million in the same period of the previous year. Higher interest rates also had a negative impact on the consolidated result, which was EUR -3.4 million, compared to EUR 8.0 million in the first half of 2022.

Our business development in the first half of the year is in line with our expectations, even though we are not satisfied with the result. But our market remains intact, and the demand for affordable housing in Germany has even increased further in recent quarters. The number of inhabitants in Germany has continued to grow and the number of newly built flats is declining. This increases the attractiveness of existing properties in the medium to long term, and we want to profit from this develop- ment. We have positioned ourselves for this. However, it is difficult to predict when the transaction market will pick up again.

In the first half of 2023 in particular, it became clear that the issue of sustainability and energy consumption in real estate is becoming increasingly important. Noratis AG positioned itself at an early stage and developed a roadmap for our real estate portfolio. This shows how we can economically reduce energy values and thus CO2 emissions in the coming years. We also benefit from this know-how during the purchase review. Thanks to our real estate platform, we can carry out an assessment of the necessary renovation costs, also from a sustainability point of view before the purchase. This ensures plannable estimates of the investments and provides the basis for the expected return on a property.

We assume that the second half of 2023 will remain challenging and that there will be no fundamental change in the real estate market yet. Our forecast remains valid. In this respect, we also expect a negative pre-tax result for the full year. In addition to the increased interest expenses, we continue to see the non- cash maturity-related changes in the market values of derivatives from interest rate hedging transactions as a particular burden on earnings. As in the previous year, we do not plan to transfer any properties from current assets to fixed assets in 2023. Such a reclassification would allow existing hidden reserves in the property portfolio to be recognised in profit or

loss. However, we would lose flexibility in the further use of our real estate portfolio.

The aim is to return Noratis AG to profitable growth as quickly as possible. We have set the course for this and positioned ourselves accordingly. The basis for this is the Noratis team's extensive know-how along the core areas of the value chain. Accordingly, we would like to take this opportunity to express our special thanks for the outstanding work of our employees. Our thanks also go to our business partners for their trusting cooperation. We would like to thank you, dear shareholders, for the trust you have placed in us. We hope you will remain loyal to us.

With kind regards