Hello, and welcome to today's Metrovacesa 3Q 2022 results presentation. My name is Elliot, and I'll be coordinating your call today. If you would like to register a question during the presentation, you may do so by pressing star followed by one on your telephone keypad. I would now like to hand over to Juan Carlos Calvo, Head of Investor Relations. The floor is yours. Please go ahead.
Hello, good morning. Welcome to the Metrovacesa results presentation for the third quarter of 2022. The slides of this presentation have been released to the market earlier this morning, and they are available through the CNMV website as well as the company website. We have also sent it by email to our usual distribution list for analysts and investors. My name is Juan Carlos Calvo. I am Director of Strategy and Investor Relations, and the main speakers today will be, as usual, Jorge Pérez de Leza, Chief Executive Officer, and Borja Tejada, Chief Financial Officer. At the end of this presentation, we will take questions from the audio conference call, as well as those sent online through the webcast platform. I now hand over to our CEO, Jorge.
Thank you, Juan Carlos, and good morning, everyone, and thank you for attending our nine months conference call. Let me go directly to slide number five, and the highlights for these nine months of 2022. We have had a good operating performance in these first nine months. As we will see later, the details with a growth in deliveries year-on-year of 22%, with a solid and stable backlog of pre-sales and a 65% increase in our net profit. We see in the market until now a resilient demand for new housing.
Despite some slowdown since April of 2022, what we see is that there is a limited and increasingly more so limited supply, which is creating or even increasing the imbalance between demand and supply, and therefore giving some good conditions to developers that are putting more offer on the market. Nevertheless, we do see increased market uncertainty, and therefore a difficulty to predict exactly what's going to happen in the future. We are on track to meet our 2022 operational targets with operational cash flow being our main target of EUR 150 million, and also very strong coverage ratios for our pre-sales for our 2023 and 2024 deliveries.
All combined, we are proposing a dividend of EUR 1.05 per share to be paid at year-end, which is equivalent to a yield of 17.2%, as of now. Details to come a little bit later. If we now move to the section of business update, page 7 is the usual key operational data that I will not go through in this page, but rather later on through the details. I hand it over now to Juan Carlos to give us a brief update on our view on the sector dynamics.
Thank you, Jorge. Yes, a few comments about the sector dynamics, looking at the recent statistics data, et cetera. Essentially, we have three messages here. One is about the continued imbalance between demand and supply, particularly in new housing. When you look at the figures about transactions in housing, you can see that year after year in the last few years, we have seen a continued progression in the volume of transactions. Actually, if we look at the latest data point, which was published yesterday, and the data was not included in the chart yet, is the number of transactions as of August with an increase of 20%, so far accumulated this year, compared to the year before.
Comparing that with supply. Supply has been relatively or quite muted in the last few years and is not growing. In fact, it is flat versus last year and is lower than it was the year before COVID. This imbalance between demand and supply is very important to understand that the dynamics of the new housing is certainly relatively solid. This is something important to bear in mind for the outlook going forward. Second message is with respect to construction costs and the implications. We have seen some slowdown in construction costs recently. The impact when you combine that with evolution of house prices is that this is essentially balancing out one with the other.
The impact on gross margins has been or so far is rather limited. We have seen in the last few months some easing of the pressure in construction costs and probably will be reflected in the statistics more acutely in coming months. What is true is that the house prices has been going up also. As a rule of thumb, construction cost is around half of the selling price. This increase in construction cost has been approximately well accommodated by the increase in housing prices. Both costs and selling prices are very likely to be moderated in the coming months or quarters.
The third comment here on the market is, as Jorge said in the beginning, the outlook on the future is becoming more uncertain. Obviously, there is a deterioration of the macro expectations. An increase in inflation, an increase in rental rates. All this context may have an impact. We don't know, we don't have a clear picture on how intense that could be. But certainly we are coming from a period where the market has been having a good solid dynamics. Back to you, Jorge.
Sure. Moving on to page number nine, on our pre-sales. Basically, in the nine months, our net pre-sales have been 1,341 units, which is more or less flat compared to last year's build to sell sales. The average monthly absorption ratio, the way we calculate it, which is net sales divided by units under commercialization, sold and unsold, is 2.6% for nine months. Any figure around 3% is healthy, so we consider that this is a healthy figure. Important to highlight is the higher unit prices, 16% increase compared to last year, ASP of EUR 323,000 per house.
This is due to an improved product mix as well as HPA that we have been implementing, you know, in the portfolio that we have under commercialization, 5% on average, during the year 2022. Moving on to deliveries now. We are on track to meet our full year targets, in the range of 1,600- 2,000. As of end of September, we delivered 1,327 houses with obviously 100% of the works completed, more than 95% of the units pre-sold. We consider that, you know, 2022 is almost done.
Again, I think important to highlight here is that the gross margin is stable, 21.2% gross margin, in line with our expectations and our guidance of being on the low 20s. For 2023 and 2024, we have a degree of coverage that is better than what we had a year ago for the two coming years, you know. I think this is important to highlight in a you know in a maybe more uncertain scenario coming to start with a higher coverage definitely gives us you know confidence of having good 2023 and good 2024, with 75% pre-sold and 50% pre-sold respectively.
Talking about operational activity in general, our pre-sales backlog today stands at around 3,050 units. Again, with an average selling price that we've got EUR 308,000 per house, which is 10% increase versus December. Again, this reflects you know the HPA that we have been accumulating in our portfolio. A healthy mix between contracts and reservations, and as I mentioned before, giving us you know a good coverage for the coming years. The units under construction, we have now 3,441 units.
If you remember what we mentioned in the last quarterly call, it is that we postponed the start of some units given the construction cost situation and the unwillingness of some construction companies at the beginning of the year to sign fixed price contracts. We refused to go to open price contracts, and we waited until the end of the year, and we are now in full throttle mode. We will, by the end of the year, have started construction of more than 2,000 units, so therefore reaching again our operational targets for the year in that regard.
Units under commercialization, we have 5,000, almost 5,800 units under commercialization with having launched 1,600 units in the first nine months, of which, you know, 53% is already pre-sold. Again, looking to end the year with more than 2,000 new units put into commercialization, which will give us, you know, a large variety of product to be sold in the coming months. Finally, the active units, which, you know, gives an idea of the level of activity that we have for the coming years. We have now 7,600 and almost 50 units that are active.
We've launched 1,400 in the first nine months, planning to end the year with 2,000 or slightly above 2,000 units launched in the year. Moving on to page 12, you know, talking about our land under management that we always touch on this. We continue, I think, relentlessly the conversion of our high quality land under management into fully permitted. We in this case zoom in on Madrid, where, you know, we are coming with next product project launches that coming from land that was originally under management and that has now become ready for launch. Example of such products are Mesena in the heart of Madrid.
ARPO, which is a very well sought after district in Pozuelo. Los Cerros, which is one of the southeast developments in Madrid, where we have 1,600 units, and urbanization works have already been started. Getafe, in near the station, the train station, which is, as you well know, a dormitory city, where we have 420 units to be launched next year now. I think slowly, but we are, you know, gaining visibility on the transformation of key land plots that as we've always mentioned our land bank is our key land feeder for product launches in the coming years.
Growing in Madrid with more than 900 units to be launched in the next two years is obviously you know a good let's say safe option for difficult times. In aggregate in the period since our IPO we've launched about 2,200 units that were originally not fully permitted. 2,400 have been transformed and 2,100 units have been sold either via land sales or via residential sales. Moving on to page number 13 and talking about land monetization. I would say here that we are adapting with flexibility to a more challenging context. Obviously when you know when things get tougher I think land market gets also tougher.
Nevertheless, as I will explain in more detail, we're looking and we're adapting to ways to monetize that land, not only in straight land sales, but also adding value to the land, and therefore being able to monetize it differently. In the first nine months, we've monetized in total EUR 55.2 million, of which EUR 30.2 million are straight land sales and another EUR 25 million is land corresponding to Clesa, where instead of selling the land, we've opted to go for a turnkey development and therefore monetizing the land in a different way.
The 30.2 million of land sales are split between public deeds signed, and therefore what is shown on the P&L, and that is EUR 6 million, and then binding sale contracts of EUR 24.2 million. These binding contracts will become public deeds and therefore appear in the P&L, mostly within a year time. Some before the end of the year, but most of them in 2023. Finally, others, which is this EUR 25 million that I mentioned, where we signed in July a contract with Vita, the UK student housing and co-living operator, a contract for a turnkey development of a 20,100 square meter building, where the land value is approximately EUR 25 million.
Even though it's not a straight land sale, it's a way to monetize, you know, our commercial land in a way that not only gives us more margin, but also, you know, defends the value of that commercial land. On the right side of the slide, you can see that in total, just giving a picture of the total land sales and land monetization through commercial assets that we've done in the P&L, is about EUR 258.7 million, which is already on the P&L.
On top of that, we have EUR 11.3 million of residential binding contracts and another EUR 81.7 million to be monetized in commercial assets that will be delivered in the next years. Okay. With this, I finish with the business section, and now we move on to the financial overview, and I hand it over to Borja Tejada, our CFO.
Thank you, Jorge, and good morning, everyone. Just some key figures, some messages about our figures. 5% rise in total revenues up to EUR 352 million. In terms of margin, 21% of development margin in line with our guidance of low 20s. EUR 34 million of EBITDA and net profit of EUR 16 million, representing an increase of close to 65% compared with last year. In terms of net debt in the slide 16, very solid financial structure with 6% of loan-to-value. In terms of gross debt, EUR 352 million, with a cash balance of EUR 287 million, out of which EUR 200 million are unrestricted cash. These figures allow us a dividend distribution in December in order to reach a more efficient capital structure.
Now, I will hand over Jorge with the closing remarks.
Thank you, Borja. Moving on to page number 18. As I mentioned at the beginning, we're very happy and proud to announce a new dividend of EUR 1.05 per share, which is equivalent to EUR 159 million. This is subject to approval on a general meeting that has been called for the twenty-ninth of November, and the payment to be expected within the year. The board of directors may decide to offer the option to receive the payment in cash or in cash and shares combination, always at the discretion of the shareholder. The shareholder may decide to have 100% in cash or a combination.
This represents a dividend yield, this payment alone of 17.2% yield on recent company value. If we add to that the May payment, dividend payment that we did, that would represent around 27% yield overall for the year 2022, which I think is obviously unusual, but represents what we have been defending always, which is our, you know, our committed effort to cash flow generation and remuneration to our shareholders via dividend. Now, moving on to page number 18, I think, you know, why this high dividend requires probably in excess of our ordinary policy requires a little bit more of an explanation, no? I think the quick question is that on top of our...
The key answer is that on top of our ordinary distribution, we're moving into a more efficient capital structure in a moment of the company where we are more stabilized, where we have a good visibility on our residential deliveries for 2023 and 2024, where land sales, even if weaker, come as an upside to cash flow generation. Therefore, we are happy and ready to, you know, increase and move to a more efficient capital structure. Basically, the EUR 1.05 per share is coming or is broken up as follows. EUR 0.555 per share is an extraordinary one-off distribution. On top of that, EUR 0.5 per share is the normal distribution that we would do.
This figure is coming from doing the simple calculation of free cash flow generation of EUR 150 million times 80% is EUR 120 million. If you remember that, we normally distribute it at the end of the year and in May of next year. EUR 120 million times 60% that we'll distribute at this time, that is 0.5 EUR per share. Okay. The remaining 40% of the free cash flow of generated or to be generated in 2022 will be considered for a subsequent distribution in May of next year, obviously, as usual, subject to board and shareholders approval, final free cash flow generated, market situation, et cetera.
Again, just to sum up, 0.55 extraordinary one-off, 0.5 is 60% of the free cash flow generation ordinary policy, and the remaining 40% to be considered in May next year, as usual, as I mentioned, subject to board and shareholders approval. This reflects, I think, our strong balance sheet and cash flow profile. And while still keeps us in a pro forma LTV, which is 12%, that is still prudent, we consider, lower than the peers in not only Spain, but in continental Europe. We still, you know, continue our policy of future distribution of 80% of our cash flow generation.
Now considering obviously subject to a target LTV range of between 15% and 20%, which may be reached in future years. We will never surpass a figure that is above what is reasonable, a reasonable LTV at any point of time. Finally, moving on to page number 20 as closing remarks. I think we were seeing a good progress on targets and strategy. Nevertheless, you know, we are all moving into rough or entering what we call rough waters, no? Basically the increased uncertainty, the deteriorating macro context, it still has unclear impact.
I'm sure many of you will ask me later, and I will probably send back the question to you because I think we're all kind of struggling to you know to understand the implications. Nevertheless, we believe that in the situation that the company is at in terms of we are very well positioned to manage the current context. We've done so in the past with the COVID, and I think we're better now than in that situation with again you know a platform that is delivering now for you know in many quarters in a row with a strong balance sheet with coverage for the coming years that is good. Therefore, we are maintaining launches for now, which means that we are activating new units.
We're also starting construction, as I mentioned before, of more than 2,000 units in the year, which reflects, first of all, that, you know, those construction starts are covered with sales and that are still selling. That we believe that they, at the end of the day, the market, will react back at some point, and then we will be back to business as usual. Obviously, we'll be flexible to adapt. I think if anything, we've demonstrated in, you know, in the last couple of years is that we're flexible to accelerate or to hit the brakes if necessary. As of today, we don't see that necessary.
Finally, just to reiterate myself a little bit more, but we are, you know, delivering on our very attractive dividend policy, and we will continue to do so. With that, I would finish, and I hand it over to Juan Carlos.
Thank you, Jorge. We are now ready to take questions from the audience. We'll start questions from the audio conference call, and then later from the webcast. Operator, are there any questions?
Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. Our first question comes from Sofía Barallat from CaixaBank. Your line is open. Please go ahead.
Yes. Hi, good morning, everybody. Thank you for taking my question. First, just to confirm that I think you were pretty clear, but just to confirm that I got the message correctly. Despite having this EUR 1.05 dividend announced today an extraordinary component, you are still planning on paying a final dividend on 2022 earnings after the full year 2022 accounts are closed. Also, if I may, on land sales, as you mentioned in your presentation, you have some softening of the demand both for commercial and residential land, given the tougher macro conditions.
here, I don't know if you could provide an update of your guidance for land sales for the year, how much of those EUR 24 million land sales in binding contracts we will see booked in the P&L in 2024, 2022. Finally, with the increase in interest rates and probably also in labor cost, where do you see your gross margin in 2023, 2024, and maybe 2025 if possible? Thank you.
Yes. Good morning, Sofía. Jorge speaking. Thanks for your questions. On the first one, full year 2022 dividend, yes, I do confirm that our intention as of today aside of the one-off extraordinary dividend is to continue distributing a payment, the dividend with a payment in November and a payment in May of next year based on the free cash flow generated for the year, and then the split between November and May, you know, being between 40%-60% in each of them. That means that, you know, like we have done other years, at the end of the year, we will calculate the final cash flow and then, subject to the board decision and shareholders' decision and with, you know, with normal current conditions, we will have another distribution in May.
As we have done in other years, I think except in May of 2020 that due to the COVID, the board decided to put the dividend on hold. As of today, that is the idea. Okay? In terms of land sales and the guidance for the year, I think for me, the important is the guidance of EUR 150 million cash flow. With the current level of deliveries and current level of sales, and the cash coming from those sales, so no matter if they are public deed or private contract, we hit that target of EUR 150 million and therefore distribute, you know, that 120, 80% of that 150 million, which is 120.
For next year guidance, we will provide that, you know, in our next quarterly call at the beginning of the year as we usually do so. I think, you know, the main difficulty there might come, might be coming more from commercial side, which is coming more from institutional investors. We are, you know, finding angles to add value to those lands and, you know, going for, as I mentioned before, you know, BTR or development, which obviously delays a little bit the monetization of the land, but increases the margin, and therefore in a way, we're not just in a wait and see situation, but rather being active in monetizing.
In terms of the increase in interest rates, as you mentioned, and construction costs, I think, you know, 2023 all our obviously all the construction was started, you know, last year, all the projects were started last year. Therefore, you know, we know what the cost is for those contracts. In some cases, there have been deviations that have been well offset by the sales increase. With 75% of those units pre-sold probably by the end of the year, 80% or more, you know, we don't see a deterioration of the margins in 2023. 2024, the picture is a little bit similar.
I cannot be. I still have to sell 50% of the units. We do have visibility on costs because all the, you know, projects have started or will be started in the coming weeks, but we already have the final figure, construction cost figure. I think that we can still stick to our low 20s guidance. You know, I cannot be specific between 20 and 22% because that will depend in the end on, you know, the 50% remaining sales that we still have, whether we capture more HPA or not. Again, we stick to our guidance of low 20s. Thank you.
As a reminder, to ask any further questions, please press star one on your telephone keypad now. We have no further audio questions. We will now answer the questions received on the webcast. Juan Carlos Calvo, please go ahead.
Yes, thank you. Yes, we have several questions through the webcast, starting with a question from Ignacio Domínguez, analyst, from JB Capital. Good morning. Thank you for taking my questions. I have two questions. How is demand behaving in October? What can we expect in the coming months? Secondly, is the EUR 159 million dividend subject to extraordinary general meeting approval? Is this a final dividend, or can we expect another dividend based on the cash flow generated in the fourth quarter of the year?
Jorge speaking again. I think there are two questions here. The first one being how is demand for October, and how we see the remaining part of the year. I think we've already mentioned that in a way, which is, you know, we have seen some weakening of the demand since April. I think in the beginning of the year, since April or even May, I think, you know, we hit record figures. Probably demand was too high. I think now the demand has stabilized at a level which is lower but is still, let's say, acceptable.
Probably, you know, and this is where it's difficult to predict, we think that it will stay around those, you know, the same level, given that even in worsening macro conditions, the number of commercialization starts in the year is going to be down or is down already by 20 or 30%, so there is less offer in the market. We still have to see, and I cannot be more specific, because it will depend. I think now we have to watch the situation month by month or even week by week, and be creative. We do have, and I think there was a graph in the presentation, similar number of visits as we had before.
It is true that I think the client now is taking a little bit more time in closing because they want to have, you know, information from the bank about what, you know, what kind if they meet affordability criteria, et cetera. You know, I cannot be, unfortunately, more specific, given the uncertainty. I can say that, you know, we are launching, we are starting construction, and depending on how the sales, you know, continue in the coming months, we will see, you know, how to react. The second question that was around the dividend payment, I think I answered to Sofía from CaixaBank already quite clearly about the breakdown of the dividends. I think that makes sense.
Thank you. Next question from Florent, analyst from Oddo. We understand that the distribution of exceptional dividend is trying to optimize the capital structure, but why is this the right moment to do it given the uncertainty today on the macro? Should we not keeping a low leverage seen as an advantage?
Yes, low leverage is an advantage, and therefore we are, we will be at 12%, and that is an advantage. I think we're well below, you know, the peers and what is reasonable and obviously any NAV governance that we may have, et cetera, et cetera. I think we still keep that advantage. If we remained at 5.9% or even lower, as we deliver more units, I think that advantage turns into a disadvantage for the shareholder. Let me even give you, I think a little bit more light on that. I mean, we have a cash balance as of September of EUR 287 million, of which EUR 200 million is unrestricted, and this is much more than our normal needs, you know?
It's 56%, if I recall correctly, of our analyzed revenues. This is not an efficient capital structure, you know, and this is a constant feedback that we have had from our shareholders. We think that the decision is appropriate, and we still maintain a quite prudent debt structure. Again, I mean, you could say, "Why do you take it now and not before?" Well, I think I gave some color on that. I think we are already close to our run rate in development activity. We don't need the extra cash to fund things. We have a good outlook on 2023 and 2024. No significant debt maturities until 2026, you know.
I think the time, even if it looks strange, I think we are, you know, right on.
Okay. Next question from Mariano Miguel, analyst from Banco Santander. He has three questions. First, which part of the demand is showing more resilience, and which one is deteriorating faster? Second, have you noticed an increase in cancellations in recent weeks? And third, on the Oria project, any news you can share with us?
Thank you, Mariano. On first question, which part of demand is more resilient, I would say that probably secondhand international buyers is proving quite resilient. Also, you know, in what is not second homes, I wouldn't say that there is a clear winner or a clear loser. What we see is different reactions in times. For example, Catalonia reacted sooner with a bit of a slowdown, and however, now it has again reacted, and it's coming back to previous reasonable sales. Palmas Altas in Sevilla has been performing extremely well all the time because it's a new development where people want to live.
Other places, you know, are doing a little bit better or a little maybe worse, but nothing that we can say, you know, clear winner or clear loser. I think the uncertainty hits everyone in the same way except probably the international buyers. Cancellations in the recent weeks, not really anything above normal. I think what we have to watch closely, you know, in the coming quarters all the industry in general, is reservations, when reservations turn into contracts, because that's when the client is making first of all, a cash commitment of 10%, plus another 10% during the construction. Then, it's a leap of faith that, you know, on the condition that they will get their financing in the future.
I think given the uncertainty, what we hear from our clients is that for them to make, you know, now it's more unclear or more difficult to be sure. That's why they're taking a longer lead time. I think until now, nothing out of the normal. In the future, again, with those, you know, the uncertainty, we have to watch that closely, and we will adapt, as I said, before to that one. Again, I know you would all like me to be much more specific, but with the level of uncertainty, I really want to hand the question back to you and ask you what you think.
Finally, on the Oria project, we continue, and as you remember, we signed, as I mentioned, already one of the first turnkey contracts. We are in advanced negotiation for another one. For the remaining part, we still don't have any negotiations open.
Okay. Moving to the next one, questions from Daniel Gandoy, analyst, from JB Capital. Has several questions. First one, he says that your coverage ratios for 2022 and 2023 seem to have increased only modestly versus the previous quarter. Is it right to think that many of the presales you have done recently are related to the deliveries over the year 2024? And if that is the case, any reason of why that could be the case? Secondly, your presales include an increase of 16% in average selling price. Can you explain if there is an improved product mix? And what are the trends behind this improved product mix? Are the new houses larger, location is different, et cetera?
Thirdly, in spite of the uncertainty in the sector, you're planning to have 2,000 units under construction before year-end. Is it fair to say that the strategy and the run rate delivery targets remain roughly unchanged in spite of the uncertainty?
Okay. Jorge again speaking, sorry. Let me see the questions so I can see them. I think the first question is a little bit detailed to give you know, the exact answer, but let me, you know, explain to you what we see on the trends. I think the trend that we see is that people are buying houses that are close to delivery. If they are finished or very close to be finished, they, you know, there's a bias towards those kind of housing. Why is that? I think because the client in that case has more certainty about the mortgage that they can get.
In 2024 deliveries, for example, that you're mentioning there, I think you know, the client has to be very sure that they will get a mortgage versus, you know, buying a house for 2022. We, I think if you allow me, we are going to look at that mix that you mentioned in more detail because I don't think there is any hidden trade, any hidden trend there. I would rather think the opposite. In any case, what I think is that the coverage ratios are good, you know, for 2023, I mean, in 2022, when we say more than 95%, obviously, it's close to 100% now.
I think in any case we will come back to you offline, Daniel, with to see if there is anything specific around that. The second question, I think you know, the product mix, it depends a lot. I think we have you know, even though our average long-term average is probably around EUR 300,000 per house and will be so, suddenly you know, there are a couple of years where you have products like Málaga Towers or some projects in Costa del Sol where the average unit is EUR 1 million or more, and that throws off the balance a little bit. I think we've you know, the figure to take is that we've increased prices on units under commercialization around 5% in 2022.
We also put some in 2021. You know, the difference is coming from the mix. Finally, in your question number three, I think what we can answer, what is easy to answer is that the number of units launched, the number of construction starts, and the number of units starting commercialization is around 2,000, the 2,000 figures. In some cases, a little bit above that. Whether that level of activity remains so, as of today it does. Whether in the coming quarters it remains so, it will depend on the level of pre-sales. As of today, you know, with the level of coverage that we have and level of pre-sales that we see, we're happy to continue with that.
If we need to be slower, we will be slower. If we need to be faster in some developments, we will be faster. I think in all operational metrics, except sales, I can be very specific in sales, you know, we will see quarter by quarter.
Okay. Another question from an investor on your build to sell sales. Your monthly absorption rate of 2.6%, it implies 38 months on average since early development. How should we read this? On affordability, what is the average price to income ratio for your typical buyer, and what percentage are equity buyers?
The healthy absorption rate is, as I mentioned, around 3%. That means that you sell three units every month, and therefore in 33 months, you've sold the whole development. Why do I say that? Because normally, we start commercialization six months before starting construction. You add 20-24 months, let's take the midpoint, 22 months construction, that's 28. You take around three to four months to delivery, you're around 30-something months, and that gives you the, you know, exact timing, ideally to have sold 90%-95% of the units upon delivery, and then with the tail, you maximize margin. 38 months is, I would say, within that range. You know, is 3% better? Yes. Is 2.6 reasonable? Yes, it is. More than reasonable, I would say. Is 4% reasonable?
I would say no. That would mean you're selling up too fast and therefore leaving margin. I think, you know, as I mentioned before, without getting into two decimal points, around 3% is okay. The second question, maybe Juan Carlos, you can take.
Yes. Using some data with our buyers' profile, on average, 31% of our buyers buy fully with equity, with no debt. The other 69% are taking a mortgage, not always a mortgage of 80%, mortgage loan-to-value, but with a mortgage. The average price-to-income ratio with our buyers, it is 4.6 years. It is price to annual income of the buyers. Okay. Next question is, again from one investor. Is this extraordinary dividend in 2022 formally considered as a dividend or a capital distribution? Is it subject to withholding tax? I will take this answer.
I mean, the dividend we call it dividend, but formally it is a distribution of paid-in reserves. The reason is because we don't generate sufficient net earnings to distribute such a figure of dividends, so therefore it is against paid-in reserves. Because of that, it is not subject to withholding tax. Gross dividend and net dividend is the same figure. Another question, again from an investor. Are you expecting average selling price to decline?
I think we discussed that. No, not really. I think the balance between supply and demand, I think will allow us to hold the prices. As Juan Carlos mentioned, we don't see, you know, strong HPAs like we've seen in the latter part of 2021 and 2022, but we don't see a decrease either.
Okay. One further question. I think this will be the last one from the webcast. How many finished unsold units do you have at the end of the third quarter and do you expect this figure to increase in the future? Well, we don't have that figure ready for report. Obviously it is not a substantial figure, but it is not a figure that we generally report.
Nevertheless, as Jorge mentioned previously, 100% of our units to be delivered in 2022 are ready, are completed, and therefore it will be delivered in the next month.
Okay. This was the last question from the webcast. Operator, do we have any additional questions from the conference call?
We have no further questions.
Okay. In that case, we conclude the result presentation for the third quarter 2022 results from Metrovacesa. The investor relations team will be available to take any follow-up questions that you may have. Thank you all for your participation. We hope to speak with you again next quarter. Thank you. Goodbye.
Today's call is now concluded. I'd like to thank you for your participation. You may now disconnect your lines.