Earnings Call: Q3 2021

Oct 25, 2021

Hello, and welcome to the ECAD Results as of September 30, 2021 Conference Call. My name is Courtney, and I'll be your coordinator for today's event. Please note that this call is being recorded. And for the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions. You. And I will now hand you over to your host, Olivier Vignoles, Chief Executive Officer and Victor Aubrey, Chief Financial Officer to begin today's conference. Thank you. So good morning, everyone. Olivier Vignoles speaking, and thanks for joining this call this morning. So I'm going now to present our Q3 results with Victor Aubrey, our CFO. And as it was said, the presentation will be followed by a Q and A session. So in terms of context, you know that the COVID-nineteen crisis is more or less now behind us. It's not 100% over, but the sanitary situation is more or less stabilized in France and the situation on our market is getting back to normal. And just as an example, we have now most of the people clearly back to the office building. So day after day, the situation on our different market is improving and we are probably a little bit more optimistic than we were in July. So let's go to slide 4 to start the presentation with the figures of our revenue. So total revenues for Icat for the 1st 9 months of the year amount to EUR 1,224,000,000 which is an increase of plus 25.2% compared to last year. And maybe more important, it's an increase of +20.2% compared to 2019. If you look at the revenues from our investment portfolio, they increased by +3.7 percent and they are more or less stable on a like for like basis. We have a significant increase of the revenues for Icarde Probusio, our development subsidiary, plus 47.4%. That's for IFRS revenues. I will come back later for the economic figures and the growth is even higher. So it's clearly a strong rebound for the activity after the COVID-nineteen crisis. You will have your own analysis, but we do think that those figures are quite satisfying in the current post COVID-nineteen environment. So if I want to comment the key highlights, I'm going now to Slide 5 for the key takeaways, and Victor will elaborate more into the detail of the different figures. I think we had a very solid business performance across our 3 different business lines. For the office portfolio, I would like to highlight 2 things. The first one is a very active asset management with more than 140,000 square meters signed or renewed during the 1st 9 months of the year. It represents an annualized headline rental income of more than €35,000,000 And our gross rental income for the office portfolio were up plus 1.9% and stable like for like, which reflect a very resilient leasing activity. Regarding the Healthcare division, the revenues are up plus 7%, driven again by acquisition and the Pan European expansion in 2020 and also 2021. And again, Victor will come back to that later. The good also the good news for Icat Sante is the fact that we have renewed with one of our most important tenant, Ramsay Sontay, we have renewed 10 leases in France for another an additional 12 years, which means that we have secured €38,000,000 of headline rental income again for the next 12 years. For ICAP Promotions, our development subsidiary, the business rebound is still ongoing as expected and it's driven by a very strong demand for residential. Residential represents 85% of the total revenue and that remain very, very strong. As I said, the economic revenues stood at nearly €780,000,000 up plus 55% compared with 2020 and up plus 31% compared with 2019. And if you look at the figures for new orders, they are also well oriented. It's plus 39% compared to last year and plus 8% compared to 2019. So again, Victor will give you some more detail. But if you look at the asset rotation within the portfolio, we have been quite active during the 1st 9 months of the year. In terms of disposal for the office portfolio, we are very confident in our capacity to reach our €500,000,000 plus target of disposal for 2021 for the office portfolio. At the end of September, we have already closed €462,000,000 And you know the reason for that is that the appetite for core asset is still very strong in the Paris market. In terms of investment for the Healthcare division, we have invested nearly €480,000,000 and we are fully in line with the annual target that we have for 2021, which is between €450,000,000 to €500,000,000 It's important also to highlight that our balance sheet remained very strong and S and P has confirmed a BBB plus rating with a stable outlook for Icard and Icard Sante. I will come back to the guidance during the conclusion. So as a first comment, we do think that the 1st 9 months figures reflect, I think, the resilience, not to say the strength of our 3 different activities. And again, the market is now much more well oriented and is clearly linked with the fact that probably the sanitary crisis is more or less over. Victoria now, the floor is yours. Thank you, Olivier, and good morning, everybody. Let me now share with you the operational performance of our business lines, starting with the Office Property division. I'm on Slide 6. Let's talk first about the leasing activity. The top three figures reflect clearly the continuation of the very active asset management with a total achievement of 140,000 square meters signed or renewed since the beginning of the year. This volume achieved in the market and the take up taking into account changes in demand and requirements represent an amount of annual headline rent of €35,000,000 and an average of 7 years until break option, a resilient duration. And important to highlight that, those new leases were fine in line with the market level and with stable headline rental income. I want to underline also the resilient rental income of the division in the context of market slowdown in line with expectation with the total revenue at nearly €285,000,000 up plus 1.9% compared to the same period of 2020 and stable on a like for like basis. By the way, the collection rate is still high at more than 80% year to date, 85% only for the Q3. And of Q3, reminding that our tenant base is very robust. The spot finance occupancy rates stand at nearly 89%, slightly down, in line with the general slowdown in the office market that was expected in 2021 that implies also longer time need to find tenants. The KPI are clearly been mechanically impacted by tenant departures communicated in 2020 and effective this year, but also on the top of that, the disposal of the 3 leases mature assets and also the completion in Q1 of the Origin Building 80% led impacted the top. Thanks to an ability to find strong maturity in new leases, 7 years, I remember you, I just said that before, I've mentioned before, the world is stable at 4.2 years. 7 topics I would like to highlight, the development pipeline activity, a strong driver for value creation for ICAD with 4 major deliveries representing more than 115,000 square meters. We are talking about Aurigene, the new headquarter of Technip Energies completed in Q1 and Westpark completed and handed over in Q2 to Groupe Ama after being refurbished previously named Fontano. Those two buildings representing more than 80,000 square meters located in Nanterre, a quite attractive area just behind Medecins with exceptional hub transportation and also attractive price per square meter for new tenants. The deliveries also include the LaTeqo Air headquarter in Toulouse completed in Q2 and the last one, the 14 square meters Fresk building located in Istolemulino that was delivered at the very beginning of October. Those 4 deliveries are let at a level of 80% on average and will generate fully let an annual rental income of €47,000,000 and a total value creation of €232,000,000 Last topic I want to share with you on the HOT position is the asset rotation that has more than actively resumed since the beginning of the year. We managed to complete in Q3 the sale of the building, Seaky Way, at 36,600,000 square meters asset located in Lyon for €138,000,000 bringing the year to date disposal total to €462,000,000 Disposals that were carried out under very good condition as already announced in June since they were made with a plus merely 10% premium to GAAP to gross asset value as of December 2020. In terms of value add acquisition, we also completed the acquisition of Ekinov for €183,000,000 This 64,000 square meter building located in Plaisirubancon in the suburbs of Paris is fully led to Renault with the remaining leases term for over 4 years and an appealing cash on cash yield of 8%. In addition, there is a potential of value creation that will be unlocked through future redevelopment into a residential scheme when the tenant will leave the building. This transaction, together with the value add acquisition of the Prairial building in Lanter closed in June 2021 for €60,000,000 brings the total amount of Hicad's office property value add acquisitions in the beginning of the year to €243,000,000 Going forward on Page 7 in a focus on the Healthcare division. As Olivier said, our revenues is at a strong level with a gross rental income at €239,000,000 up nearly 7% year on year, slightly up on a like for like basis mainly due to the index linked rent review. The gross rental income was mainly fueled by the acquisition carried out in late 2020 and also beginning 2021 in France, but also abroad with in Germany, I remember you the acquisition of 7 nursing homes from and operated by Orpierre at the end of 2020. And in Italy, the acquisition of 6 nursing homes, out of which 4 operated by COS, the largest Italian operator. Occupancy rate is unchanged at 100%. Furthermore, we continue to benefit from a solid portfolio of tenants that are long term committed with a world standing at 8 years as of September 2021, up by half a year due in particular to the lease renewals in July of 10 leases with Arame Sesante in France for another 12 years. This renewal represent headline rent income of nearly €38,000,000 and it is clearly a good illustration of the sound resilience of our revenues even in period of renewal. Our investment activity remained strong at the end of September with transaction totaling €370,000,000 on a year on to date basis, including preliminary agreements, Investments in France in short, medium and long term care represent €158,000,000 Investment abroad represent €93,000,000 split between Germany for €46,000,000 and Italy for €47,000,000 Investment in the pipelines stood at €61,000,000 with €50,000,000 in France related to the delivery of 4 short stay facilities in the beginning of the year. Since the beginning of October, investment momentum continued with close to €170,000,000 of investment in France and Italy, bringing the year to date investment to over €480,000,000 including €290,000,000 in France and nearly €200,000,000 abroad. This amount is in line with the annual target of €450,000,000 €500,000,000 as Olivier said before. All these metrics confirm once again our ability to deliver our ambition to grow in this asset class both in France and in the European country we are focused on. Now on Slide 8 for our 3rd business line, Property Development with Ecastes Commissions. As Olivier said previously, the business rebound is here as we expected. The growth of the economic revenues, that is to say that is to say, IFRS revenues plus joint venture is up by plus 55% compared to 2020, and this is also a growth of +31% compared to 2019. It is clearly driven by residential, representing close to 85% of the total revenues with 37028 new orders for residential apartments over the period, a figure plus up plus 39%. Those figures reflect the demand which remains structurally high coming from both individual and institutional investors, stable at 50% and therefore confirming their strong appetite. I also want to highlight the economic revenues for the Office and Public segment is once again significantly up plus 44% compared to 2020. It includes notably the sales of the Emblem complex in Nimes, a 900,000 square meter office space to Massifimont and 2 sales involving Icard Investment Division like the Atlet Village in Saint Trois sur Seine representing at 100% more than €50,000,000 Now looking at leading indicators, they remain well oriented, confirming growth potential for the future. Total backlogs turn at €1,500,000,000 up by plus €3,200,000,000 compared to December 2020, plus €5,600,000,000 only for residential and additional potential of revenues of €2,500,000,000 deriving from the residential portfolio comprising more than 1100,000 units that we do control through option of preliminary agreements. In total, the medium term revenue potential for Icat promotion is close to €7,000,000,000 in the 5 coming years, slightly up compared to December 2020. It represents over 19,000 units of the Residential segment and more than 300 square meters for the Office segment. Thank you very much, Victor. Now moving to Slide 9 to conclude this short presentation of our Q3 figures. Again, we do think that the figures reflect a quite solid business performance for our 3 different business lines in 2021. And again, it reflects the evolution of the different markets and it reflects the evolution of of the economic environment in France post COVID-nineteen crisis. So we are still focused on delivering our priorities for the office portfolio. The disposal plan was carried out as scheduled. We have also adapted our development pipeline, and it's still very profitable as Victor has mentioned, but we have adapted the pipeline to the current letting market environment. And we had a strong volume of new leases and renewal during this period. And again, we do think that the kind of office building that we have in our portfolio, if you look at the value for money item of rents and location, the appropriate combination to fit the new requirements in the post COVID-nineteen environment. For the Property Development division, I think clearly we are on track to achieve the target. The implementation of the road map is well underway. Just to remind you that we plan a significant increase by the end of 2025 at €1,400,000,000 of revenues. And again, we there are some changes in the market, but we follow our road map and we do think that we will deliver the target in terms of volume and profitability. For the Healthcare Investment division for Icap Sante, for sure, we had the growth and the international expansion with investments which are close to €480,000,000 this year. So we are again right on track to deliver the growth of the portfolio. For sure, the bad news of September was the fact that we had to postpone the IPO. It was mainly due to a market which was not well oriented. The week we have launched the IPO, for sure, it was disappointing. But I think it's important to highlight that we have reached a book close to EUR 1,000,000,000 clearly showing the fact that the asset is really attractive, but market was not there. So we have decided to postpone the IPO, and now we are considering the option that we will have in 2022. In conclusion at the conclusion, we do confirm our guidance. Just to remind you that the guidance was increased in July. So now for 2021, the net current cash flow for Icard is expected up at plus 6%, excluding the impact of 2021 disposal as well as the impact of the dilution deriving from the scrip dividend. So it means, at the end of the day, a plus 3% per share compared to last year, including the impact of the 2 elements I was mentioning. For the Healthcare Property division, we also confirmed the guidance at €251,000,000 And finally, we confirm also the dividend for 2021 that will be up by plus 3%. That reflects a payout ratio of nearly 83% in terms of payout ratio. So thank you very much to have joined this call. Just to remind you that we will have our Investor Day on November 2029, and it will be the opportunity for ICA to provide an update in the execution or strategic plan. And now with Victoire, we are ready to answer your question. Thank you. Okay. And our first question comes in from the line of Laurent Lauro Schuber calling from ODDO BHF. Please go ahead. Hi Olivier. Hi Victor. So thank you very much for the presentation. I would have two questions. The first one is on offices. So I have understood that you are more optimistic now in terms of leasing activity, but show occupancy rate is still in slight decrease. So would it be possible to have maybe more colors on your expectation in the coming quarters regarding your occupancy rate and breaking options that you could have in 2022? So that would be my first question. And my second question would be on Health Square. As far as I understand, your investment for the 1st 9 months of the year already reached your annual targets. So does that mean that you don't expect any further acquisition on investment in November December? Thank you very much. Thank you, Florent, for your two questions. I will answer the first one and Victor will answer the second one. Well, it is true that we are a little bit more optimistic, as I said, compared to July. I think the market is probably a little bit better. If you look at the figures provided by real estate brokers, I also do think that they are a little bit more optimistic. It's because situation is maybe not 100% normal, but it's now easy to organize. It's very pragmatic and it's easy to organize the heat of our premises. I think that now corporate are probably are now thinking maybe to not to postpone their corporate listed project, but they have now probably the capacity to move forward. So we do see more activity on our marketing side, more visits and things like that. For sure, you used to have the question of the real or the exact development of work from home with large corporate. But when we look at our portfolio, we do not see any specific move linked to the post crisis environment. For sure, development of the work from home will have on a midterm, long term trend, will have an impact on the overall volume of letting transaction. On Paris, the forecast made by the largest real estate broker is that on midterm perspective, it could be around minus 15% in term of volume of letting transaction, which means probably the trend would be a little bit below 2,000,000 square meters on the market. So we do see that in our portfolio and we have a discussion with our largest tenant. Having said that, most of them used to have an agreement with their employees for work from home before the crisis. Probably they will increase. But if you look and I said by Victorin, the departure that we had in our portfolio, they were anticipated before the crisis, especially we have some departure in New York and so on. Nothing to see with the crisis. I'm not saying that the office market is booming. I said that the situation is running back to normal. And again, we do think that for the kind of tenants we are looking for, the kind of building that we are putting in the market, good location, very affordable rent in terms of CSR specification, close to state of the art. I think we have released some competitive advantages to fit with the new requirements of the market. The 2 transactions that we have announced in July on Freske and on Eden in Norte, I think are good illustration of what will be the market for large corporate. They are looking for very good building, affordable rent and against state of the art in terms of carbon footprint. And I think we have several projects that are fitting those criteria. Probably now, I was seeing that we have adapted our development pipeline. If the market will be a little bit better, we have been very quick to adapt our development pipeline. But if the market will be better than we have expected 6 months or 12 months ago, we have also the capacity to put new projects on the market. We will be still I'm not I don't know if the word conservative is the appropriate word, but we are looking at exactly what is the market. We have several projects in our pipeline. We have said that we will launch less project on a speculative basis due to the current betting market environment. But if the market is better, we have the capacity to increase our pipeline. And again, no CIUs discussion with tenant for major departure within the portfolio ahead of us. It doesn't mean that we won't have the normal rotation with our tenant base, but no increasing departure within the portfolio. Mitra on the second question? Yes. Back to the investment plan we have done in on the Healthcare segment, Florent. Yes, regarding the figures, we have already done just to be sure you have well understood. We have already done end of September €239,000,000 concretely signed and in addition €70,000,000 on preliminary agreements, which means end of September, we have achieved €310,000,000 of investment. And as we specify in this press release, just in October, we have signed additional preliminary agreements for Hanuman of €170,000,000 which means the total is so far for this year €480,000,000 It's true, of course, that we have got additional projects under review, which means it could be possible we improve these figures one more time €480,000,000 before the end of the year. So in my point of view, EUR 480,000,000 is a minimum total investment for 2021 years. Okay. Thank you very much. That's very useful. Thank you. Just before we move on to the next question. And our next question comes in from the line of Christopher Fremantle calling from Morgan Stanley. Please go ahead. Hello. Good morning. This may be a question that you office investment activity. When you compare disposals on the one hand and acquisitions and development CapEx on the other, I don't think you have mentioned how much you're spending on development CapEx as part of this release, but perhaps you could give us that clarity. The reason I ask is that the proportion of your overall portfolio in Healthcare has been increasing over the long term. But if you are net neutral in investment on offices, the speed of the growth in proportion of Healthcare is a bit harder to achieve. So if you could just give your broad intention there on office investment or disinvestment or net neutrality, please? Hi, Chris. Thank you for your question. I'm happy to answer now and also maybe to come back to that during the Investor Day. I think where we have a very clear view of what we want to do is the disposal plan for the portfolio. We have a target per year between €500,000,000 to €600,000,000 for the next 3, 4 years. It's clearly, I think, what do we need to finance the new investment. It's also, I think, the good way to show market value for the type of asset that we are within our portfolio. So this figure is clearly maybe we could do some euros a little bit more if we have interesting offers. But a disposal volume of €500,000,000 to €600,000,000 per year is what we have in mind. In terms of investment in terms of CapEx in our development pipeline, for sure, as we said, we have said that we launch less project on a speculative basis that it means that we'll have to fill at them in order to launch new project. And for sure, when you say that, when you do that, you have to adapt to do your the pipeline to your capacity to find new tenants. So we for each year, we don't know exactly how much we have to invest in terms of CapEx in our development pipeline. As I said, answering the question of Florent, maybe we will have to invest a little bit more than expected because the market is better. That's our understanding. That's what we do see on the ground. So I think maybe compared to what we had in mind in November 2020, we will invest probably a little bit more in our development pipeline for offices, but it means that we would have been able to find new tenants. Again, Eden was a very good news, the new headquarter for Schneider in Norte and we could expect to have some more transaction. Where we have to be very flexible is on acquisition for office. At the end of the day, we do not plan a volume of acquisition every year. We are very flexible and opportunistic. We have announced this year EUR 243,000,000 of acquisitions. At the beginning of the year, those two acquisitions were not integrated in our budget, in our plan. Again, it's because on office acquisition, we are very opportunistic. We are looking for what we do think are interesting opportunities. If you look at the 2 transactions that we have closed, one is they are completely different. It was in a office building in a location that we know very well in Nanterre, very close to all our project, Origine, Eden, West Park and so on. And the building is fully led to the French state for the next 3, 4 years. And we know that the tenant will leave and we have already a project to redevelop the building. For the time being, we have an appealing cash on cash return of 6%. We know that after redevelopment, we should target an IRR double digit IRR. So we like this kind of project, but it's difficult to know if we'll be able to source 1, 2, 3 during the year. The other one is completely different. The project that was mentioned by Victor Vekinov in Pleisty Robinson. It's a project fully led to Renault, more than appealing cash on cash return at 8%. But the end of the story is a residential redevelopment. So we will sell internally the building to recap promotion and we develop one of the most important residential scheme in the Paris area. So it's difficult. It's not that I don't want to answer. My view is that probably over the next 3, 4 years, we should be net seller in our office development. But if we are able and the market is providing interesting opportunities for acquisition, if we are able to find several new tenants for our development project, At the end of the day, we should be neutral or net investor, but we have also the capacity to sell more. That's the way we look at the rotation within the office portfolio. But when you look at if you look at the plan that we have on the table today is probably we should be a little bit net seller over the next 3, 4 years. But again, with the market that we have around us, we have to remain very flexible and opportunistic. Thank you. We currently have no further questions in the queue. I don't know if you have one more question. Yes, we have one more. So go ahead. The next question comes in from the line of Peter Watson calling from Clearance Capital. Please go ahead. Hi. Thank you very much for the presentation this morning. Just a quick question on the Healthcare division and the tenant renewed for another 12 years with RamseySante. I was just wondering whether there were any further CapEx incentives agreed on the renewal of those leases. And also if you could just comment on where the rent level was reset for those leases, that would be very helpful. Thank you. Since the beginning of the year, as I mentioned before, clearly, we can see a stable ERV since the beginning. Each renewal is done with a stable condition in term of rent per square meter to be more clear. And but it's true that in term of incentive, clearly, we have seen a slight increase compared last year. It's clear that tenants are asking for, we can say, additional CapEx dedicated to improvement of the building in term of CECL criteria and also ability to organize area with more in line with the new type of demand. So it's a reality. One more time is there is a stable conditions in term of ERV. We have seen since the beginning of the year increase in incentive and especially dedicated on the CapEx additional CapEx more than focus on free run period. If I may, I can also comment back the renewal we have done on the Healthcare division because it's a good illustration in this asset class of the soundness of the economic model, we can say, because we renewed a significant amount of revenues with more than 10 leases with Ramce Generale de Santee with exactly the same level of conditions in term of revenues. And we just managed with Ramce General de Santee a dedicated CapEx level up for the coming year, for the coming 3 years to improve, as I said before, for offices, exactly the same thing, the same characteristic to improve the quality of the building and especially to improve the CSM components of the Healthcare building. So that's what I can say so far regarding your question. Okay. Thank you very much. The next question comes in from the line of Jonathan Nonato calling from Goldman Sachs. Please go ahead. Good morning. So one question for me. Can you please highlight how effectively, there may be slower demand for office in your pipeline, whether you'd be considering an acceleration of the transformation of some of the areas to other uses like residential? Or even would you consider in some of your more outward areas the use back of logistics, for instance, in Alain Gies? Thank you. Well, I think on our development pipeline, we have several projects. Some of them were put on hold last year due to the current market environment, especially in the north or south of Paris. At the same time, as we said, we have started discussion and negotiation with local authorities in order to transform some of our part of our land bank into a residential scheme. And again, negotiation with local authorities are now moving forward. So we have I think it will be an additional flexibility to use part of our land bank for an office development or residential development. I think the situation compared to 1 year ago is probably quite different. In November 2020, for sure, due to COVID-nineteen crisis, we were less optimistic in our capacity to develop some new project. What we are seeing now 1 year after that, I don't know if it's 100% the end of the COVID-nineteen crisis, what is the situation in France, in the U. K. And so on. But what we do see is that some corporate are now thinking to look for a new headquarter to lower allocate probably to decrease some of their premises and so on. So some projects that were postponed or maybe some projects that were supposed to be transformed into residential scheme, we have the capacity to be flexible. So we are not 100% sure on the fact that we will launch more projects that we have in the pipeline now. But we do see a market environment, which is more favorable. So it's not precise figures. It's not a clear example, but we have a project in Lyon. Just to give you an example, situation is quite different. If you look at regional cities, we have a project in Lyon called Stratais that we will for sure launch on a speculative basis because we do think that the market there is quite interesting. So we have no doubt to the fact that the appropriate things to do is to launch that on a speculative basis. In Paris, Syria, we have launched we are launching the Eden project is PULATE at the level of 50%, but we are comfortable with the fact that 50% is not already flat. So again, more optimistic compared to 1 year ago. Okay. Thanks. The final question comes in from the line of Veronique Neutens calling from Kempen. Please go ahead. Good morning all. Thanks for the presentation. My question was actually also about the incentives. So maybe one last thing about it. Do you see any significant change in terms of development of incentives throughout the different areas of Paris and maybe also in terms of market rent? Sorry, I didn't catch your question. If you're seeing any significant changes or differences in terms of development of incentives throughout the different regions of Paris? Yes, for sure. You have different submarket. And the situation in a submarket that we know quite well, which is not there where we have a lot of projects, it's even a different situation compared to La Defense, which is very close, where you are probably a risk of a supply. I think that the market environment in the north of Paris is probably quite well oriented, could be for us or for other players. But the development of the Grand Paris Express is now something which is a reality. The fact the Olympic Games will be in 2024, some subway lines will be completed for 2024. South of Paris, where we have our business park in Regis, What we do see, you will have the new subway line completed also by 2024. So it's not for tomorrow, but it's now for 2 years and for now. So for corporate, it's something that now taking into consideration. What we do see in Regis is a strong demand for laboratories and what we do call activity for residential, probably less for office. So clearly, when you are talking about the Paris market area, after that you have to go into the detail, submarket by submarket to look and to see which kind of product is adapted. So we are very confident for offices in the West of Paris for sure. We are not a CBD player, but the market is well oriented in the CBD of Paris. We are less optimistic when you look at the La Defense market. And the specific reason for that is that you are some projects arriving on the market that were launched 3 years, 3 years and a half ago. It's what you need to develop a new tower. So risk of oversupply plus the fact that post COVID-nineteen crisis probably a lot of people, a lot of employees of corporate are more or less reluctant to go to work into high rise building for sanitary reasons for the fact that with elevators, with a capacity which is divided by 2 or 3 life is more so La Defense will be probably a difficult market for the next 2 to 3 years. Again, north of Paris is clearly a location where you have a lot of, let's say, like this, a lot of those, these 2 new subway lines in the north of Paris, a lot of investment. I don't know, maybe we have probably this year is a bit too soon to organize a visit of the Olympic Village. But if you look, we are as you know, we are developing a third of the Olympic Village. But around in the vicinity of the Olympic Village, clearly, the environment is changing. So again, for sure, a lot of differences submarket by submarket. And after that, if you are talking about regional cities, they are probably more well oriented compared to Paris or Rio. They are absolutely no risk of oversupply. As maybe you have noticed that we have acquired a small office building in Marseille. As I said, we will launch a speculative project in Lyon. So on regional cities, we are more probably even more optimistic than we are in for the Paris region. So we have to adapt to where is the demand. We have to adapt ourselves to what our clients are looking for. But again, overall, more optimistic than 1 year ago. Okay, perfect. Thank you. Thank you very much for the call. If you have any additional questions, do not hesitate to send them to Anne Sophie, Victoire or myself. And I hope we will have the pleasure to meet you physically for our Investor Day at the end of November. Have a good day. Thank you very much. Goodbye. Bye bye. Thank you for joining today's call. You may now disconnect your