Earnings Call: H1 2021

Aug 31, 2021

Good day, everyone. Welcome to the VGP's conference call. Today's call will be hosted by Mr. Jan Van Giet, CEO Mr. Dirk Stoop, CFO and Mr. Martin Reuters, IR. Mr. Jan Van Gee, please go ahead, sir. Thank you. Thank you very much, and welcome everybody to our first half twenty twenty one results presentation. I'll try to be short. So on the page number 2, we are a pan European operator as you know and that is changing evermore as we speak. We already added one new country this year. We opened an office in Serbia. And we have also hired our country manager for France now who signed up last week. So we're looking at a number of new countries which we're going to add up and they will start contributing from the next years on going forward. We have in the meantime more than 300 employees in 13 countries. That's 40 more than at the end of last year and we still have a relative big hiring program going forward as we have really a record number of square meters under construction today. We have all of our new buildings, as you know, which have been delivered are at least 35 BREEAM Very Goodyear equivalent. You will see later in the detail also that we are now going to do our 1st CO2 neutral buildings with a very big new e commerce contract, which we just signed and where we are going to try to achieve deg and deg crema positive, which at the moment only 16 buildings in the whole of Germany have this approval. The fully standing portfolio is 99.4% let and the portfolio under construction today is 81.3% pre let and that's as of June 2021. We are our shares are listed on Euronext Brussels and maybe you know it, we also had a secondary listing in Prague, But as there is no virtually no training on the Prague Stock Exchange, we're going to ask for a delisting in Prague and concentrate completely on Euronext Brussels. And our long term partnership with Allianz Real Estate, which already exists since 20 16 and led to 3 joint ventures since inception, is now going to be expanded very soon with the 4th one, which is under final negotiations. And we hope to be able to announce that in the second half year or we're confident to be able to announce this in the second half year we will have a 4th one underway. If you look at the KPIs, we have actually today 86 parks Instead of €85,000,000,000 we have €4,480,000,000 of total processor value as of the 30th June, 324 tenants, 130 buildings which are completed and they are on an average only 3.9 years old, 99.4 occupancy as I already said. The world the weighted average lease time actually has gone up because we signed a lot of new lease agreements after the 30th June. This is the situation at the 30th June. At the 30th June, we had €205,700,000 of committed annualized rental income, which is, of course, including what is under construction, and that is including 100% of the JVs. I will go through the details of the financial KPIs a little bit later on the next pages. If you look at the highlights, then we are on page 4. We present a record net profit for the period of €203,800,000 For me, it's not the most relevant or important item on this page. The real news is really the pipeline. Our land bank efforts and long term vision really pays off. We have signed a lot of new lease agreements and very economical ones long term, which are going to not only prolong the weighted average lease term, but are also going to boost our profits going forward. At the 30th June, we had record 42 buildings under construction. So we started up 312,000 square meters in the first half of twenty twenty one. These 42 buildings were 81.3% pre let at the 30th June. But in the meantime, until now, we've already started up 17 more buildings with 426,000 square meters. And so currently, we have 1,559,000 square meter under construction, and we expect another plusminus at least I think it's going to be 385,000 to be started up. And if we count these together, then we in total we are at the moment 78% pre let with a lot of lease agreements in the pipeline. Our land bank has expanded despite the fact that we have really consumed a lot of it to 8,560,000 square meters, which is now auto committed. So it's 11.9% increase year to date. And our total signed and renewed rental income grew with 21.9 percent over the 1st 8 months of 2021 to €225,700,000 it is actually. So I looked this morning, we signed already €42,700,000 of new and renewed rental agreements this year, which is more than the whole of last year together in the 1st 8 months. We also have a strong delivery pipeline, which is normal. We have locked under construction. So this year and especially next year, we will have a lot of deliveries. We expect that we will deliver 550,000 square meter in the second half of twenty twenty one of ready made buildings, which will start to become income generating. The anticipated CapEx roll forward is expected to be fully covered by net cash proceeds from joint venture closings. If we take a look at it, we think that we can completely and if we speak about anticipated CapEx go forward, it is until the end of next year that I'm speaking. We have really advanced discussions with Allianz regarding expansion of our partnership through the launch of a 4th joint venture ongoing. The only outstanding item is the definition of how green our building is going to be, and that we are doing a common effort to make them really very green. And at the 30th June, we have the very strong cash position with €469,000,000 cash available on our balance sheet, which brought the gearing ratio to 30.4% as of 30th June 2021, which is well within the limits I want to operate the company in. And that's thanks to the successful CHF 600,000,000 green bonds, which we issued earlier in the year. Out of the CHF 225,700,000 of committed annualized rental income, dollars 149,100,000 is the joint ventures and dollars 76,600,000 is things which we're going to develop on our own balance sheet and which then later can be transferred into the new JVs. If you look on Page 5, the recapitulation of it that we have a very strong growth of total portfolio value. It goes up when we take include the JVs portfolio at 100% by almost 40% in the first half year from €3,200,000,000 to €4,480,000,000 We have a very nice growth in committed annualized rental income, and we have several iconic parks who are going to be brought to the market. We are going to start construction or we have already started construction. To name a few, Geesen is a very nice one. Heidelberg is a very nice one. Bilbao is a very nice one. But also Luxembourg, which now bought in Vienna, is one of the is, I think, one which is going to contribute very soon. So the rental income in the first half year against last half year of last year has gone up 25%. But as you know, meanwhile, there is another €20,000,000 has been added to it, which led to a record net profit. And this is record despite the fact that last year, our numbers were a little bit fueled by the sale the forward sale of our VGP Park Munchen. That was at the yield of 3.7%, respectively, 4.1%. And it resulted, of course, in a big boost into our numbers. So this year, we have a better result even if Munchen is not anymore playing a role in our numbers today. Earnings per share are a little bit lower, but I expect really a very strong second half year in view of everything which we're going to start from. An update on the sustainable development goals. Sustainability is more and more a topic everywhere. So if we talk about renewable energy, we have now 61.8 megawatt peak of photovoltaic capacity currently installed or under construction through 52 roof projects. And our pipeline includes 33 more projects, which represent 71 megawatt tree. So the total projected solar power generation will be 133 megawatt peak and that's a 40% increase year to date. We also see that more and more customers are actively using the solar power directly so that it's not anymore completely delivering to the grid, which is which was in the beginning the model. So we are less and less dependent on it, which means and also with the current rise in energy prices, which we have seen, it makes it a lot easier to have a discussion with our customers to use really the roof as a solar power generation plant for their own use. So that's going to that's a little bit a boost also behind it. If you look at the building design and certification, we are preparing, as I already said, 2 projects aiming for big and big climate positive. So in Germany, as I said, there is only 16 buildings currently who have this certificate. And that's overall the class of it. Also commercial real estate and housing, etcetera. In the meantime, 100 percent of all of our new building projects at least BREEAM Very Goods or equivalent certified, all the ones which have been started up just before or after 2020. And we are preparing a joint EBRD research assessment for sustainable mobility and circular logistics buildings. And as I said, also in our new joint ventures with Allianz, we have put an analysis on our buildings and going forward and how long they're going to be in line with the Paris climate target. And if you look at that, in view that our buildings are so young and all certified, we are we can say that long after 2030, all of our buildings or the bulk of our buildings is really compliant with all of these targets which have been set by the regulators. On the ESG reporting update, we've initiated GRASP reporting for the 2021 cycle. We are measuring currently as we speak the portfolio and the tenant CO2 footprint and we are analyzing decarbonization pathways. If afterwards we'll have 1 on 1, we can already show a little bit on what we can do, what we already have done and that we are on a very good track record. And then we have initiated the system analytics rating process. That's a bit it on the sustainable development goals. Operational wise, I have to say that Germany has been like always a very big contributor, but we see that the other countries are starting to perform really, very well. So the committed annualized rental income, which is really the driver of our business going forward and the best finger on the pulse to see how we are performing, have increased to €225,700,000 as of 31st August. At the end of 2020, it was €185,200,000 So we already have €40,000,000 extra. The joint venture portfolios represent €149,100,000 and the own portfolio of €76,600,000 occupancy rate 99.4 percent. Actually, we have more than 330 contracts, and there is a lot really a lot of big contracts in the pipeline for the second half year. Normally, it's very atypical. Normally, July August are 2 complete silent months. In these two months, it's the first time that I lived through this. In these two months, we signed for €20,000,000 of new rental income spread over all the countries. And it's there's really a lot of demand in our market. Also thanks to our land bank, which is really ready to construct on which we can start immediately. So the signed and renewed rental income as of yesterday is €42,700,000 That's an increase of 21.9% this year only. If you look at the total land bank, it's always hand in hand the total land bank secured. We have €12,58,000,000 and we have completed gross leasable area. There is part of it which already has been divested in the past when we sold part of it. It's 4,545,000 square meters, of which 3,600,000 actually are under construction or in ownership of the joint ventures. The investment portfolio on slide number 10 has grown to 4,481,000,000, up 38.7% year on year. Western Europe still is the biggest bulk of it. It represents 77% of the total portfolio, 75% of combined portfolio growth contribution and 71% of our operating EBITDA. And as you can see, if you look at the country breakdown, Germany is absolutely dominant still with 59%. Czech Republic is on the 2nd place and then Spain, the Netherlands and the others are growing very fast, but still behind. And if you look at the completed version of the construction land bank, then you see we have development plans for an amount of €461,000,000 on our balance sheet, which we own. We have for €1,100,000,000 under construction, which is 26% of our total balance sheet and of our total assets, and the completed ones are €2,874,000,000 or 64%. The development plan, as I already said every year, is in it. Virtually, it's at fair value, but it's fair value that the price at which we acquired it. So there is no, how would I call it, air inside of our balance sheet. It's really it's there at cost. If you look at Page 11, our blue chip top 10 tenants, Krausz Mafi is, of course, a very big tenant. It's down now to because this is at the 30th June, it's down now already 12%. And I think that by the year end, it will be below 10% if you look at the potential growth of the rental agreements, which are in the pipeline. Amazon is growing fast as we are signing a number of new lease agreements with them, which are under negotiation today. If you look at that at the moment, top 10 clients account only for 36.6% of the total portfolio, so we have a very well spread risk profile. The weighted average lease time of the portfolio, which I find one of the most important indicators, at the 30th June, it stood at 9.6 years for our own portfolio and 7.6 years for the JV. Actually, we have signed a lot of new lease agreements, which are all long term, more than 15 years or longer. We are now again with our own portfolio well over 10 years of weighted average lease term that's gone up. And in the second half year, because this is the customer base with a tenant portfolio breakdown as it's a picture on the 30th June, but it changes every day. The e commerce you will see at the end of the year, it will have gone up significantly because we are signing a couple of very big lease agreements with new e commerce related tenants. I'm going to Page number 12. So in the first half year and it's only a matter of timing, it has got nothing to do with things, it's a matter of when we started up and when we are due to deliver, but we delivered 5 buildings, 81,000 square meter, which was 100% pre let. And we have a very strong delivery pipeline for the second half of twenty twenty one when we expect to deliver more than 550,000 square meters to the market ready income generating, which will be handed over to our tenants. Yesterday, we delivered a big building in Lhasa and 50,000 square meters to our tenant Conocoques. And there is a lot of other big buildings, which are going to be delivered in the next months coming. You see a couple of pictures of the buildings under construction on the page. The current development pipeline, so in June, we had 42 buildings under construction. There was €1,127,000,000 At times, we've spoken about starting up at least 400,000 square meter a year. I guess that's a bit in current market circumstances, we're doing a bit more because currently we have 1,500,000 more than 1,500,000 square meters under construction. It equates to $69,400,000 of new lease contracts and the portfolio the actual portfolio under construction is 81.3 percent pre let. We have 17 buildings more started up since the second half and we expect at least to start up 286,000 square meters in the coming months because we have to, because we already for the biggest portion of it have pre let them and we have delivery dates in which we need to respect. So the total thing on the construction, once we start up these ones, will be 78% pre let. On the right top, you can see Munich, which we started construction in September on the greenfield September 2019. And you see we're well on track to have it ready by June next year when we are going to do an earlier handover than anticipated, which was actually due in November. It was going to be earlier. If we go then to our land bank, and I find it still a very important indicator of how the teams are doing. So the total land bank owned and committed, and you know we always buy our land subject to having the permit. It's now €8,560,000 We acquired during the first half 800,000 square meters of land. So it means that we achieved the permit for it so that the condition precedent for acquiring it is done. We still have roughly 3,000,000 square meters committed where we are working on achieving the permit. And we have another €4,000,000 where we signed in the beginning of this year in the first half or until now new letters of intent where we are doing our due diligence and trying to make it committed going forward. There are really a lot of iconical new plots of land inside of this, which we think will lease very easily. And this means that at the moment, we have 5,600,000 square meter of footprint development potential embedded in the land bank. That's only the footprint. Normally, including offices and mezzanines, it will be up to more than 6,000,000, but we only show what is the footprint of the buildings as development potential. That's a bit on the business update. I'll go quickly through the financial performance of the first half year. So the operating profit was up €22,100,000 to €240,000,000 which is driven by the higher share of net profits of joint ventures and associated with up €65,800,000 partially offset by lower net valuation gains on investment properties in the first half years. We earlier, we only started up 312,000 square meters, which is yes, and it's of course, last year, it was booked a bit by our Munich project, which was in the first half year in the numbers completely. On a look through basis, the net rental is up by €5,100,000 year on year to €32,000,000 So if you take our 50% share of the net rental income out of the joint ventures plus what we have on our own balance sheet, it's up to €232,000,000 And the net valuation gains on the property portfolio are €163,200,000 Our own standing portfolio and we see a lot of compression of yields inside of the market, but I think we're still fairly conservatively valued at a weighted average yield of 5.18% versus 5.51% as of December 2020 and the share of net profits of joint venture and associates of €84,400,000 The joint venture's standing property portfolio was valued on a weighted average yield of 4.53% versus 4.56 76% as of December 2020. We've also made accrual for €2,000,000 reflecting contribution to the VGP Foundation, which we already put in our numbers. And we have taxes, which are primarily deferred taxes related to unrealized gains on property development, which will become neutralized at the time when we shift the developments, which we now have in new joint ventures. On Page 17, it's our income statement, which we give every time to take a little bit of a better look in detail at the EBITDA triggers of our balance sheet and our activities. So on the left in the left column, you see the investment side that is the rental income. EBITDA out of rental income, excluding any revaluation result, went up from $25,300,000 to $33,400,000 the EBITDA. The joint venture is expected to upstream actually €21,200,000 to VGP in September 2021, more than the €15,000,000 which we originally anticipated. There is more cash available. On the development side, if you look as we are now, virtually all the assets that we are holding are also intended to be sold to our joint ventures. Then the valuation gains, the net valuation gains was positively affected last year by the GGP Bayern Munich joint venture, is a little bit lower than last year. So we have €161,600,000 and the EBITDA out coming out of it is €145,900,000 Our CapEx and spend over the first half year went up to €245,000,000 but will be significantly higher in the second half year. And if you look at the property and asset management, as the assets are as there are more and more income generating assets under management, the joint venture management fee income went up with 2,400,000 The administration expenses went up with CHF300,000 only. So the EBITDA went up from CHF2,900,000 to CHF5 1,000,000 We are also getting more and more income out of our green energy rollouts, but it's still too small to introduce it here. We have an investment committed of €31,100,000 at the time for that part. And as soon as we have a little bit of better view on the real income, we will also report it inside of our numbers. If you look at the assets of the balance sheet and asset side, as of June 2021, investment properties are at €1,264,000,000 The completed portfolio out of that was €195,000,000 under construction €709,000,000 and the development plan €359,000,000 And the investment in joint ventures, so we have the joint ventures 1, 2, 3, which are all related to the joint ventures with Allianz. And the 4th one is MURDEG, where we have a joint venture. We're currently working on 2 new joint ventures, which we're going to do, 1 in Spain, which we anticipate to do in the U. S. Country and one new one in Germany also. But these are really development joint ventures in which we take on together with people who have land positions fifty-fifty and where we are going to buy out their stake at the end when the thing will be developed. So something similar like MUDEC, it is one of the ways how to get to good development land plots. The other non current receivables increased €50,000,000 to €340,000,000 which is reflecting increased shareholder loans to joint ventures mainly Munich and MOSDAQ going forward. And the non current receivables also includes the balance, which is due by Ireland's real estate in respect of BGP Park Munich €67,000,000 which is going to come out later on. And we had a cash position of €469,000,000 And we have already we have also, in addition, several multiyear unsecured credit facilities, which are not drawn at the moment, but are available. We have €150,000,000 extra credit lines, which we didn't which are undrawn today. If we look at shareholders' equity and liabilities, so the equity, it went up with €129,000,000 since December, despite the fact that we paid out €75,000,000 dividend in the first half of twenty twenty one, total liabilities went up to €1,553,000,000 Our debt financial debt is €1,380,000,000 and the increase is due to additions of our first green bond, which also was substantially cheaper than the other debt. We issued it at 1.5% interest rate. The gearing at June 21 stood at 30.4%, which is well within our typical operating range for our gearing ratio, which I've always said that I would respect between 30% 40% to 45%. The group's financial covenant on all these bonds which we've issued and all the debt is 65%. And I will do everything what is necessary to keep it that way. So actually that's it. If I go to the summary, I have to say that we have a strong business performance across the portfolio. I'm very proud of the whole team. I must say that it's fun to work in BGP. It's like a family, a house to which everybody seems to be happy to belong and they're all performing very well. There is a very healthy eagerness to perform every year better. We have achieved many new milestones and which resulted in a record net profit. But I am especially happy with the pipeline of contracts which are already signed and under negotiation. It's really heartwarming, I have to say, for me as a CEO to see that happening. We also have a lot of new iconical land plots, which give me the certainty or the feeling that the future looks bright. If I speak about Bilbao, Heidelberg, Bratislava, Bucharest, Luxembourg and then the new countries we are going to, I will it looks like the market is buoyant and we are with confidence looking forward. There is one negative point to it and that is that there is really a very big inflation of construction costs, which we have seen throughout the market and it's very remarkable the inflation of the construction costs. But that is to a large extent offset through higher rental prices, which we can achieve in these markets nowadays and the further yield compression, which we have seen this year. So our margins are really intact. We are expanding and focusing a lot on our corporate and social responsibility agenda. It's a focus point for myself going forward. We are advanced discuss in advanced discussions with Allianz. That is something which is of a daily thing. It's part of our business environment. And yes, we have a strong cash position. And we are looking at a couple of closings going forward with the joint venture, which gives us quasi certainty that our CapEx needs for this year and next year are well covered and won't be an issue even with this very big growth rhythm which we have at the moment, especially thanks to the fact that it's well faced and that there is a lot of buildings which are going to be finalized this and next year, which should be then can bring into the new joint ventures. So the outlook is bright. I have to say, I'm always very prudent. We try to be prudent in saying what we are going to do and never overpromise. But we I look at the second half of twenty twenty one and beyond that into the beginning of 2022, 2022 with confidence. The development activities should continue to operate at elevated levels. We know that. We see that there is a lot of things which we have already pre let. We are going to have to start up. We expect that technological changes, the green effort, sustainability and the green energy transition, which force enterprises to change their premises to be it's the same as us. The investors are looking at us. They are expecting from us that we deliver green buildings, but also our tenants are our potential tenants they are forced to renovate their facilities. And e commerce all of this is going to continue to be an important driver. Greenfields are going to become more and more challenging, but as you can see, there's a lot a big transition inside of BGP also to new brownfields facilities, and it's with a lot of potential. In our existing land bank, our work in progress, as I call it, provides the foundation for growth over the coming years, and it literally still grows month by month. We are always focused on new top locations, and we're always trying to be fast and agile to acquire new opportunities in the market. We have a continuous focus on improving our clients and our portfolio of Tier 2 footprint and that's going to be, I think, one of the main focuses going forward. As I already said, I see our platform of customers really as a platform to which we deliver a one stop shop facility with more and more not only anymore. It's not only a building anymore. It's a solution which we deliver, including the engineering of all the aspects which they need technically, but also deliver the green energy and try to reduce their CO2, try to manage their CO2 carbon footprint. It's all in one package, and it's making the income generating side with ever bigger and there's always a lot more potential. That's how I look at it. And then yes, of course, there is a continuous operations with Allianz Real Estate. So I think this is the most positive message I ever brought to the market, but it's really we're having a great year. Thank you for your attention. Operator, I think we can open the line for the research analysts to ask questions, please. Sure, sir. Thank you. We'll take our first question now. It's from Wimi Lohrey from KBC Securities. Please go ahead. Your line is open. I hope you can hear me fine. Yes, we can, Wim. Good morning. Okay. All right. Good morning. Thanks. I had a question on what you said in the beginning about the FTE in France that you added. Can you tell us a bit more about the plans, about the timing, certain regions, customer segments that you are looking for? And well, especially on the timing, when can we see some concrete things happening? Wim, that's yawning very far ahead. We signed we have a new full time employee, which is starting soon. He signed on last week. We are going to start from Lyon out. That is going to be our home base. And we will see the I think experience learned that the 1st 3 years are really the start up year, so it's going to go slow. We need to identify the possibilities on the market. But the first, it's always comes with a man with a plan. And I think we have found a really good man with a good plan, somebody very experienced on the market, who has done big developments in France. And I feel confident that we're going to be able to do something there. But I cannot disclose any details on our fiber plants. You will see going forward. We'll keep you up to date. Don't worry. Okay. Thanks, Javi. And let's try to think ahead. Maybe just a follow on, on the ESG initiatives. Maybe also there, when how do you think you can kind of disclose the reporting I mean the financial reporting on that? Will there be like a separate segment in your reporting? Or and what kind of timing should we expect there to see some financial details? Wim, it's Martijn here. The investments that we are currently making is basically building out the solar panels and we've given you the details. The total pipeline is now up to €33,000,000 As Jan mentioned, we've invested €30,000,000 The returns on that obviously takes a bit of time. So it doesn't it first needs to have some meaning. Our plan is for the full year to show you a separate line, so you will start seeing it, but that's from a reporting perspective. So from a modeling perspective, this will still be de minimis if you compare that to the grand scheme of our overall performance. This will take a few more years to really sort of take up a bit more speed. And it's obviously it's an incredibly important investment from an overall portfolio perspective. But from a financial perspective, it's obviously smaller if you compare it to the overall CapEx we make. Okay. Well, I'm looking forward to it. So thanks for those answers and good luck on that. Thank you, Will. Thank you. Our next question comes from Frederic Renard of Kepler. Please go ahead. Your line is open. Hi, good morning. Can you hear me well? Yes, we hear you well, Frederic. Good morning. Okay. Good. Well, I just wanted to come back on the question of wind. Can you shed light a bit on how you are going to consider recharging the electricity to your cement? And I will ask the question afterwards. I have 3 other questions. So how we plan to recharge? So how are they going to pay for it you mean? Yes, indeed. Yes, there's basically 2 models for that which we like to use. 1 is basically us selling the energy to them and we typically sign for that a power purchase agreement, a long term energy contract or the tenant leases the installation from us long term. So what we do not do is offer the roof for investment by the tenant itself. So we always own the solar installation. Okay. Thanks. Then next question is on the like for like. You don't communicate on that. I see that there has been some renegotiation. Can you maybe shed light a bit or give some color on at what rent uplift did you sign new contracts? Or was it at the same level of rent? I would appreciate to have more color. I will answer on it. Jan here. It's a very difficult question to answer on because going forward land plots have gone a lot more expensive over the past years due to really there is a lack of availability of land plots. So when we look around us, we see very aggressive buyings inside of land plots, which have which are at a lot higher prices than the ones which we have in our land bank portfolio. And we are profiting from it that we can achieve higher rents. But the rents compared and it's really different from country to country, from region to region and from it depends on demand regionally. But like for like, I think we are about 20% higher than 2 years ago in the rental price today, between 10% to 20% overall higher per square meter than the rental price today on a like for like basis looking forward. Okay. On average, okay. Yes. Okay. Then maybe a final question on the JV resilience. You are expecting a closing in the coming months. I guess the closing will be sizable considering the amount of perimeter you have in terms of development? Yes. We have so much cash on the balance sheet. Yes. We have so much cash on the balance sheet today that we have decided that we are going to push the closing until the beginning of 2022 and or even later because we want to profit from the rental income, we can decide on when we do the closing as you know. So we are playing a little bit with it now so that we can move out the closing a little bit later than have the cash available when we really need it instead of having so much cash on our balance sheet because for this year the CapEx is completely covered with what we have on our balance sheet. Okay. So we shouldn't expect something coming in Q4? No. Okay. We have moved to 2022 in common agreement with Allianz. All right. Then the final question I would have is on a front end I read in the press release is that it's noted that the 4th JV is expected to upstream circa €20,000,000 in September 2021. €20,000,000 is it at 100% or is it your share of the JV? That's our share. That's the PGP share. Okay. Thank you. You're welcome. Thank you. We'll move towards our next question from Mr. Jaap Quinn of Kempen. Please go ahead. Good morning, gentlemen. If you don't mind, I will fill in for Peter this morning. So firstly, on yields in the CE region, looking at your reports, I see there was quite a bit of yield compression in Czech Republic, a little bit on the weighted average yield in Romania. I think there could be a relationship between further yield compression in Romania, especially with the upcoming transfer of assets. So if you could just speak around the yields in Central Eastern Europe, please? Well, the yields in Central Eastern Europe are still relatively high compared to the yields which we are seeing in Western Europe in Spain, Italy and France and Germany. The yields have compressed a lot more. But the market has made a move, which is, I think, normal. The market has made a move, and we see yield compressions everywhere around it around us. I think that our assets are still relatively conservatively valued in Eastern Europe because the market transactions which we are seeing, where we have been offering also have been significantly more aggressive than the yields which we have valued our portfolio. So there is for sure it's not only in Eastern Europe, it's also in Western Europe, but it is for sure in the first half of the year has seen again a relatively strong compression in market yields for newly built A quality assets. And if you would transact something in Romania, like portfolio of prime assets because 9 seems kind of unlikely. I mean where would you kind of ballpark the yield? Well, the 9 is reflecting also the fact that we have in Timisoara, we have a lot of short term leases. So it is also a combination of how long the lease is, what the quality of the asset is, etcetera. But if we look now at our Bucharest development or our Ara development, which are a lot longer, I think that we are going to be somewhere it will start with the 7, the new yield. That is where I expect the market to be. And if I look at my peers, which are there and at their valuations, then it is where their assets are valued at. Okay. That makes sense. And then like you're right, we say the land bank increase is quite impressive. Could you maybe give some color on the square meter pricing of the plots you were able to secure in this year? Oh, yes. But it's we have bought a lot of iconical new land plots. So it's difficult to say how the land prices are evolving because it's a mix of very difficult different countries. And you we have countries at which we buy at €20 per square meter and which we have countries at which we buy at €300 per square meter. But the average price which we paid this year for new land is €110 per square meter. But yes, it doesn't say anything. In Bilbao, where we have bought, it's not in our books yet because at time, but we have already it's committed, it's bought, we have already paid the first payment and the thing. We are buying at the price of €160 per square meter, a brownfield, which we think is extremely cheap because Amazon just did a transaction right next door and they paid €450 per square meter for land, which is also a brownfield but already destroyed. And actually, I'll give you one example of how the market is going. We had in our calculations for the Bilbao thing, we had it would cost us to demolish the thing and to refibish it, that it would cost us €1,500,000 Meanwhile, the steel price has gone so much up that they actually we signed the contract with the contractor that he will pay us €4,000,000 to do the demolition. So the land price goes actually down again if you look at it. So it's difficult to give an answer on your question because it's a case by case. But everywhere where we go, we think that the price correlates really to the rental price, which we can achieve. And we are feeling very certain that the margins which we are used to work our work we can achieve them everywhere. There is always a minimum margin which we are targeting. We feel very confident that on the land plots where we are today in today's market, we can achieve the margins which we want to achieve. Yes. That's key to understand. Thanks for that. And maybe finally, I mean, I think you already spoke on it on the amount of cash. I mean, looking back, I mean did you raise too much cash? Or is it something you're not really bothered with that there's No, no, no, no. We knew which tsunami was going to come. So we don't have too much cash. No, no, no. We're trying to optimize and organize ourselves. But I think the bulk of the cash will be used in the coming months. It's really going fast now because we have a lot of construction as you have seen. And there is a lot going to be started up. There are new land pots coming in. No, no, we don't have excess cash. We just don't want to be every 3 months in the market because that's why it's costing a lot of management time to do these exercises. So I think it's fairly well optimized our cash planning going forward. Okay. Good. Yes, because also I think one of my final remarks would be around the pipeline. If I look I'm not sure if you can comment on the average construction time, but if I kind of ballpark it, it's still kind of around 12 months, then it seems that you kind of have to deliver around or even over 1,000,000 square meters next year. And then going even further down the road where we have, I guess, a lot less visibility than you personally would have. But I mean, would it be it would be kind of unreasonable to my that our thinking to say that you will drop back to kind of 500,000, 600,000 square meter levels afterwards. And we would keep expecting levels of kind of the average of around 800,000 square meters. I mean, I guess you are prone to some caution here and that's very natural. But I mean, would you call us crazy if we were to model that? Yes. No. I don't want to answer on that question. We are trying to be prudent looking forward. I think the market is exceptionally busy today. I will see how long that goes on. I think there is a lot of indicators that the markets will keep on being very busy. As already said, there is an enormous pressure on everybody to become more green. There is enormous pressure on the car industry is changing completely. The car is not anymore a burning motor, but it's a gadget and it needs people who are programming and it's the same competition than the technology companies. So they need to have these very nice offices and other things to attract them. It's all drivers which play in our favor looking forward for renewing our infrastructure. And then as infrastructure, I mean, the buildings in which they operate. So I think there's good drivers. But for us to say that's going to be 800,000 square meter rolling forward, that's an assumption you have to make. I'm not making it. I just do my best to deliver the best I can. Thank you, Jaap. Thanks. Thank you very much. We have our next question from Sander Bunck of Barclays. Please go ahead. Hi, good morning team. Thanks very much for all of that and the additional color. A couple of questions from my side. The first one I would have is on your current, say, the $1,600,000 of square meters under construction. Can you give an indication of how much of the profit there has been taken already and how much is yet to come? Well, on €1,100,000 in our numbers and the rest is yet to come because that's not in the 30th June numbers. So that's roughly what it is. And there is another $380,000 which is going to be started up in the second half year, and that will be also in the numbers of the second half year. Okay. So just so of the current $1,600,000 under construction, dollars 1,100,000 of like $1,100,000 out of that the profits have been taken there and the rest is yet to come in the second half? Yes, correct. Okay, great. Thank you very much. Second question I had was on and I know there were it's a pretty small number in the grand scheme of things, but just curious to hear your thoughts on this. I mean, you have some terminations, I guess, lease terminations in the first half. Like if you were to We had €800,000 of terminations, but we have meanwhile, we've totally overcompensated that because we signed for EUR 42,700,000 of new rental agreements and renewals. And going forward, this year, there is I don't think we have any expiries anymore. And next year and the year after, it's 2 times less than 3% of the total portfolio. So it's we have the detail somewhere in if you look into our press release, we have the detail somewhere. So the signed and renewed is amounted at 30th June. It was €22,700,000 driven by 417,000 committed of new leases signed. That was €21,400,000 new annualized rental income. And then the terminations represented a total of €800,000 or 15,000 square meter, which were in the joint venture portfolio and which have meanwhile been completely re let, I think, at the moment. Yes. No, that's very clear. I was mainly just interested or curious to hear about if those when those terminations happen, what kind of rental levels are once you re let those units? Are they basically in line with previous passing? I think you mentioned earlier that you thought that market rents have gone up by 10% to 20% over the last 2 years. So is there actually quite substantial reversion in there? Just to get a bit more flavor on that aspect actually. Well, going forward, it really it depends on from region to region and from location to location. But to give you a bit of flavor, we really we just released now space in Hamburg, where DHL terminated and we let the space out to Emma Handel, which is already a tenant at our site. And there we have an uptake of almost 20% in the rental income. So yes, if you look at Berlin, Berlin has a big rise in rental prices because of the latter price which has gone up. If you look at Prague, there is in the Czech Republic, vacancy has gone down to less than 3%. So the rental prices have gone up significantly. Yes, it really depends on what is the availability, how is the rent price and what is the percentage of speculative buildings on the market, which is in most of the countries now happily very well under control because of the scarcity of land and because of restrictions of the local governments who don't want to have speculative constructions. They want to know who the tenant is going to be, who the user is going to be. So that's all driving the rental price up. Yes. Okay, great. Super. And one final question, and you touched on it already various times, but just can you give a bit more flavor on that? There's obviously in the development angle, there's quite a few there's cost inflation basically on land and on construction costs. That is offset with increased rents and lower yields. Can you give a like can we, for example, say land prices have increased by 30%, 40% over the last 2 years, Construction costs have gone up by 20% over the last 2 years. But at the same time, rents have increased by 20% and yields have compressed by 100 basis points. Is that roughly ballpark what we should be thinking at? Or is it vastly different? No. I think you hit the nail on the head. That's about it, yes. Very good. Thanks very much. Yes. Thank you so much. Christine, thank you. Thank you very much. Our next question comes from Ina Maslova of Bank Degroof Petercam. Please go ahead. Your line is open. Hi, good morning and thanks a lot for the presentation. I'm dialing in for Vivien. So I hope you don't mind a couple of questions. The first one, I wanted to just to double check on the rental growth and the type of contracts you're closing because of course on the wall side, it's very long and especially in the markets where there is an increased pressure on accessibility. Are you increasingly well, more to say what are your thoughts around the length of leases and especially where you could be securing rental growth, let's say, over a shorter period of time, would you consider closing shorter leases or including a clause where a step up of rents could be considered earlier? Just to gauge a bit if that's something that you were thinking about or if that's perhaps already happening? Well, our market in our market, it is institutionalized that we our tenants are the drivers of the lease agreement done. And if they want to prolong, they can prolong and we have to follow. And the only rental growth which we have is the indexation because all of our rental agreements are subject to consumer price index. Sometimes they're a bit capped or there is some deviations on it, but it's all of them are indexed. And that's the so we are protected against inflation. That's one thing. But it is our absolute aim to close as long as possible lease agreements to have certainty about the buildings which we are constructing that we know that for a very long time, we have a nice rental income, stable rental income. And it's not our I don't think it's our goal. It cannot be our goal to speculate on short term movements in the market on rental prices going up or down. That's not what we want to do. We want to have a long term secured rental income of which we are sure that it is secure and that it's functioning and that is in our model and that it functions. We're not going to speculate on short term and then trying to force our tenants out to make them it's not our business model. And it's maybe that is something which can function in the retail market or in the office market, but it doesn't certainly function in our market of logistic and light industrial assets. And all of our competitors are closing the same type of contract and they do both. Very clear. More and more tenants are investing quite substantial sums in the buildings. So they really are looking for the long term also. We are doing a new building in Giesen, the one which will be cleaner positive. It's a big investment from our side because being it's a very huge building, it's 152,000 square meters with a parking lot tunnel and it's a very large e commerce player, a European one. And the tenant itself claims that he's going to invest more than €300,000,000 inside of the building. So it is also, in his perspective, important that he has, of course, a good rental price to start up, but a very long term lease agreement, so that he also has certainty about the costs which are going to come. It's I think it's totally logic that with such an investment from their side, it has to be a commitment from both sides, not only from them, but also from us. Very clear. Thank you. Thank you. Next question is from Saravanabala of RBC. Please go ahead. Your line is open. Hi. Thanks for taking my question. I just have one left. Are you able to give the LTV at each of the JVs, please? LTV at each of the JVs levels. The LTV at the joint venture number 1 is currently at 46.9%, I think. At Aurora, it will be around 50%, just 50%. And that's the 2nd joint venture. And in Munich, there is no LTV because there is no bank loans on it. It is financed through shareholder loans so far. But the commitment on Munich is that if we drawdown, we can maximum drawdown 60% LTV. Okay. Thank you. You're welcome. Thank you for the last question. I will pass over back the call to the speakers. Please go ahead now. Thank you everyone on the call and looking forward to maybe see you in person soon now that we are all getting vaccinated and this corona thing is behind us. And thanks once more. Thank you. Bye bye. Thank you, everyone. You may now disconnect. Thank you for your participation today.