So good morning, everyone, and welcome to Citicom's Q3 twenty twenty Results Audiocast. We have this morning published our Q3 twenty twenty Interim Report, which you can find as usual from our webpage under the Investors section. I'm Laura Jauhernen. I'm the Head of Investor Relations at Citicom. Today, here with me, you have in the audiocast our CEO, Mr.
Scott Paul and our CFO and Executive Vice President, Mr. Eero Sigfone. Scott will start today's audiocast with an overview of the quarter and Citicom's performance in the COVID-nineteen environment. This will be followed by Era's overview of the financials. Scott will conclude today's presentation by providing you insight on our strategy and plans going forward.
After the presentation, you will have a chance to ask questions. As usual, there will be a separate Q and A session held after gentlemen have finished. Scott, please go ahead.
Thank you, Laura. Good morning, everyone. We're pleased to present Citicans Q3 results that again were solid even during the greatest stress test of our time. I'll present a short summary of Q3 results and the key highlights of the quarter. And while I'm happy to discuss the strong performance of our portfolio, I'm even more excited to provide you additional color on the progress of our long term plans, which I will review at the end of this presentation.
And in between, Era will provide Citicom's financial overview and outline where we stand after three quarters of twenty twenty. Citicom's financial and operational performance were again solid in the COVID-nineteen environment. The decline in net rental income remained modest for January through September. Total NRI adjusted for exchange rates was 2.2% behind last year. Our like for like NRI, excluding the impact of currency changes, declined by 4.7.
Collection rates for previous months continued to increase. H1 stands currently at 95% and year to date, we are at 94%. To date, we have collected 93% of Q3 rents. We expect the final collection rates to be higher as there continues to be some slowness in payments during the COVID-nineteen pandemic. Year to date administrative costs have also declined by 5% compared to the corresponding period in 2019.
The decline in fair values of properties was modest at 0.6%. This reflects the stability of our business, which is based on a large share of necessity and municipal service tenants. Our LTV slightly increased to 46.8% at the end of the period. Remain fully committed to strengthening our balance sheet and lowering the LTV ratio. We are taking steps to accomplish this, which include monitoring the disposal market and acting accordingly.
This financial performance was possible as a result of our strong operating KPIs, reflecting the stability of our strategy and the strength of The Nordics as an operating region. Footfall ran between 8590% compared to Q3 twenty nineteen. However, tenant sales continued at prior year level with sales being up 0.3% compared to last year. Like for like sales were down slightly by 3.7%. This is a result of higher average purchases by the consumer, which in the first nine months was 15% higher compared to last year.
Leasing activity has remained strong in 2020. As of Q3, we have commenced leases for 175,000 square meters compared to 113,000 square meters in 2019. Our strong and stable performance allows us to narrow our guidance to the upper end of the previously communicated range. The decline in net rental income remained modest and rent collection further strengthened during Q3. As mentioned, our total NRI declined by 2.2% and like for like NRI by 4.7%.
Both figures have been adjusted for currency exchange rate impact. Without adjusting for currencies, our total NRI declined by 5.2%. Of this decline, we estimate that 4.1% results from direct COVID-nineteen impacts and 3% from FX rates. Our rent collection for H1 increased to 95%, resulting in a year to date collection rate of 94%. Results reflect both our strategy, which is focused on Assessi based tenant mix as well as operating in The Nordics that have been thus far less affected by the pandemic.
And I would add because of the dedicated work of our team in all of our countries. Tenant sales have remained strong as the consumer seeks us out for necessity purchases. All of our centers have remained open for the entire year. And in Q3, all tenants continued to be open for business. As mentioned previously, year to date footfall has stabilized in the 85% to 90% range.
And more importantly, total tenant sales are now even with last year. The consumer has adapted to the current situation and visits our centers less frequently, but with a clear intention to make purchases. This is evidenced in the average purchase increase per visitor, which is 15% higher compared to last year. As mentioned previously, our leasing momentum remains strong in 2020. Leasing activity has continued, and we have leased 175,000 square meters of space compared to 113,000 square meters in 2019.
Signed leases include tenants supporting our mixed use strategies such as the city library of Espoo, which will open up in Lipa Live, a family health center in Wasson, Alixia Gem Chain in both Eso Omni and Lipa Live, as well as grocery stores in Hogdalen and elsewhere. This strength and stability are a direct result of having a larger share of necessity in municipal tenants. This adds to the resilience of our portfolio and brings stability to the business and cash flows. As mentioned in previous quarters, over 35% of our GRI comes from stable necessity based tenants and only a very small portion, about 2.9%, are based on turnover. In line with this tenant mix strategy, the public sector is a growing part of our business.
Currently, the public sector and health care services account for 7% of our GLA with strong credit behind these leases. Our average cost of occupancy has remained low as a result of stable tenant sales. This is an indication of our tenants' ability to maintain profitable businesses in our centers, which is an attractive selling point to potential new tenants. Furthermore, this means that there's room for rent growth through indexation and re letting. Our year to date occupancy rate has been affected slightly by 1% as a direct result of COVID nineteen.
However, occupancy has stabilized and grew ever so slightly in Q3. The earlier dip in occupancy relates to losing a few individual tenants at the beginning of the crisis. However, we are very pleased to see leasing activity level picking up again. With comparable rates, the average rent was EUR 22.9 per square meter. The average rent per square meter decreased slightly due to weaker exchange rates.
Our leasing spreads of renewals and re lettings were positive in Sweden, Estonia and Denmark. Leasing spreads were down slightly in Finland in part due to a very small sample size. The impact of COVID-nineteen on our business has thus far been limited. Just to recap, 100% of our centers have remained open. And at the end of Q3, all of our tenants are open for business.
Footfall has stabilized at a level of 85% to 90%. But more importantly, tenant sales are close to prior year level due to a change in consumer behavior and a 15% higher average purchase. Rent collections have further strengthened and year to date standing is currently at 94% and Q3 at 93%. We provided no new COVID-nineteen discounts in the last quarter. Occupancy has stabilized and retail occupancy is currently at 94.1%.
And the valuation decline remained minimal at 0.6% with a financial impact of $29,000,000 in Q3. Throughout 2020, we have remained focused on our long term goal of diversification through densification. The majority of our assets are located in connection to the most important transportation hubs in the top cities in The Nordics, where there is natural demand for densification and new residential and office space. Our aim is to continue our capital recycling and to diversify our retail exposure through densification. Value creation through zoning on property already owned by Citicom will provide a future value increase of €200,000,000 on building rights alone.
I will discuss this in more detail following Eero's financial overview. With this, I'd like to turn it over to Eero.
Thank you, Scott, and good morning, everybody. I will go through the financials in a little bit more detail, starting with the quarterly performance. And as Scott mentioned, we did have a good quarter in circumstances. And if we start from the net rental income level, we had a quarterly net rental income of €52,900,000 which, as you can see, is 2.4% below last year's corresponding quarter. But actually, the COVID-nineteen impact was approximately €2,300,000 and the currencies had a negative impact of €1,100,000 due to particularly the weakness of Norwegian krone.
So actually, on a corresponding comparable basis with stable FX rates and neutralizing the impact of COVID, actually, we were slightly ahead of last year's result on net rental income, which I think is a good achievement. On April earnings level, we were 5.7 below last year's level on a quarterly basis, like EUR 2,000,000 behind. And actually, same reasons were behind that as in the net rental income side. Then having a look at first nine months together. And on first nine months basis, net rental income level, we were €8,500,000 behind last year's result.
And I will be going in detail through the net rental income bridge in a while. And we have there also added a complete COVID breach. So for the first time, we are going to disclose quite exactly what exactly were the impacts of COVID to our results. On net rent on sorry, EPRA earnings level, we were €5,500,000 behind, I. E, 5% behind.
And EPRA earnings was less below last year level compared to Net Rental income, largely because we have, on the other hand, been able to save on SG and A costs due to the tough cost control that we have in the company and also due to the lower financing expenses. I've already alluded to the weaker currencies. As you can see here, particularly the Norwegian krone took quite a dip in March, late March. And it had to do, of course, with the COVID, but particularly also with the price of oil and Norwegian krone being associated with oil. And both currencies strengthened quite nicely in And actually, Swedish krona is pretty much back to the level of last year end, but Norwegian krona continues to be weak.
And as a result, that has impacted our results. Then the net rental income bridge that I promised. And here, you can see that on the other hand, we had two properties. We used to be a co owner of Stoner and Torbjorn also previously, but in the beginning of the year, we acquired the remaining stake of these two centers in Norway that did have an impact of €6,700,000 We, on the other hand, we disposed of certain assets in Finland, two of them, and that had an impact negative impact of 2,400,000.0 Like for like, net rental income was negative by €5,900,000 largely due to the COVID impact, which I'm going to reconciliate in a moment. And then this negative FX had an impact of approximately €5,000,000 on net rental income level, and that completes the net rental income bridge, which, like mentioned, still finalized at a very good level of 155.5%.
Then to the new disclosure on the impacts of COVID-nineteen. And of course, these are estimates, seeing that we have not, like, reconciled them to the last 1,000, and these are management estimates. But anyway, we feel that and trust that they are accurate And it gives you some kind of a view on what is the impact on several line items. First of all, the capital gross rents, which mainly has to do with the increased vacancy due to COVID and certain other items, the impact of that is €2,000,000 on a first nine months basis. Then the straight line impact of all COVID related rental discounts for this period is €1,100,000 And then there is a multitude of some other quite important topics like turnover based rents, specialty leasing, parking fees and other, and you can see their impact here.
I would also like to raise the impact of credit losses and credit provisions credit loss provisions, and that due to COVID has increased by €1,700,000 totaling currently approximately €3,000,000 And here, I would like to highlight that they are mostly credit loss provisions, and we have had very few actual bankruptcies and full losses so far. So this completes the COVID-nineteen bridge. On the fair value changes, we have in Q3 so called internal valuation, but in a way that we are provided by JLL and CBRE, JLL for Finland and Sweden, CBRE for Norway, Denmark and Estonia. So they provide us market rents and cap rates, are advising us on cap rates, and we based then the valuation on those advises. And the result was that the cap rate was slightly wider.
And for the full 'twenty, so far, the cap rate has been, on average, widened by approximately 20 basis points from 5.3% to the current 5.5. And additionally, of course, there has been some element of market rents to the valuation. For the quarter, the negative valuation was €21,600,000 and together with the IFRS adjustment of 1,400,000.0 it was added up to €23,100,000 And when we take into account the 50% of Chista, then the number is 28,700,000.0 And the first nine months valuation result, 110.5% without Sista and 128.1%. So I think that also this is a fairly stable performance and highlights the fact that in The Nordics, the fair valuations tend to be over the cycle more stable than in some other places. Then the EPRA net asset value bridge, we did end up at 11.14 NAV.
And here, the EPRA earnings naturally had a positive impact. And then all of the valuation items that can be found under indirect result had an impact. And also the translation reserve. Translation reserve means the equity that we have in foreign subsidiaries denominated in Swedish krona and, in particular, the Norwegian krone, and that had a negative impact of 0.54. And as a total result of everything mentioned here, the NAV ended up at 11.14%.
No major changes in the financing metrics. Loan to value ended up at 46.8%. We still have a very well staggered loan portfolio with ample liquidity, which I'm going to highlight over the one of the next slides. And before that, the financing key figures. Like mentioned, available liquidity is considered very good, and all of our revolving credit facility is completely undrawn.
So we haven't drawn anything of our revolving credit facility. The average loan term is approximately four years, 3.9% to be exact. We have 81% approximately of our debt portfolio in fixed interest and approximately 2.4% was the average cost of debt. And in more details, the average liquidity, so we had nearly €600,000,000 of liquidity available, $588,000,000 to be exact. And the liquidity continues to be excellent, and we don't have a lot of debt maturities to worry about and are in discussions right now to basically take care of whatever we have outstanding.
Then finalizing my part with the outlook and guidance, and this is an important message as well. We have substantially narrowed our guidance and we have increased the midpoint of the guidance sort of highlighting our confidence to the underlying business. And basically, the direct operating profit guidance range has been now tightened to 178,000,000 to €185,000,000 and per EPS, €07 4 to €0.78 And then the adjusted per EPS, as can be seen here, between zero six five euros and €0.69 And with this, I would like to hand back to you, Scott. Thanks, Hiro.
A good quarter, obviously. I would like to provide you a bit more insight into our strategy of diversification through densification, something that we have kind of hinted at over the last year or so and have been doing a lot of work behind the scenes. I think we feel like it is time to share some of our insights in this with you. All of our assets are located in cities with strong country level economics. Furthermore, the majority of our assets experience strong local demographics with high consumer purchase power and strong customer inflow driven by urbanization.
The environmentally and socially conscious culture in The Nordics encourages densification that has clear environmental benefits. For municipalities, urbanization creates a clear need to invest in infrastructure and to accommodate the growing number of citizens. It also means ensuring the availability of housing and office premises for people to live and work. Simultaneously, sustainability of area development and developing services that attract wealthy citizens and companies is a key concern when designing these areas. All of this creates strong demand for densification.
We are in a natural position to participate in this densification. We already own assets in prime locations in these areas with direct connection to the most important transportation hubs. These properties have additional capacity to gain new building rights through the zoning process. Furthermore, existing and strong relationships with municipalities and working with area development makes CityCon the preferred partner. In addition to these great existing locations, we have a proven track record for creating award winning destinations.
We are also known for developing green assets with innovative energy and recycling solutions that are important for the Nordic community hubs. For CityCon, densification provides attractive add on business on top of our already strong retail assets, creating significant portfolio diversification as a result. It also increases the number of people in the catchment area, creating synergies with the existing retail portfolio and balances intraday fluctuation of customers in the existing centers. We intend to continue shifting the portfolio composition further towards mixed use through maximizing the densification potential on our existing sites. This would be complemented with making selective disposals of noncore assets.
Fully implementing the current identified development potential of 600,000 square meters will significantly diversify Citicom's portfolio and the future share of retail will decrease to a level of approximately 65%. It's currently at 82%. The 600,000 square meters is inclusive of 200,000 square meters of condos that will not, because of their nature, remain in the portfolio. Completing this densification plan will increase GLA and create synergies with our retail assets. It's important to highlight that the value creation from densification starts in the zoning process once saleable building rights are received and prior to potential CapEx outlays.
Another important point to emphasize is the long planning and zoning process that allows case by case decision making on execution of individual developments. All decisions can be made gradually with the balance sheet allowing. The geography of the development portfolio includes 22 potential development sites in four countries with a total GLA of 600,000 square meters. Of this, 285,000 square meters are residential and 325,000 square meters are commercial, meaning mostly services, offices, and depending on future market demand, potentially even hotel. The 285,000 square meters of potential residential development consists of two parts, 100,000 square meters of rental premises and 185,000 square meters of condos.
As mentioned earlier, these projects create value upon completion of the planning and zoning phase through acquiring building rights. This value creation in connection to our existing locations is estimated to be 200,000,000 Euro. Advancing through the planning and zoning process requires minimal CapEx. The decision on whether to invest, sell, or contribute building rights in a JV is made at a later stage in the process. We already own these sites, which makes us essentially free land for Citicom.
As you can see from the graph, there's a multiyear time horizon for execution of this strategy. Decision making on how to proceed with individual developments will be made on a case by case basis. Balance sheet and financing remains a key consideration in this decision making. So to summarize, Q3 was a strong quarter for Citicom and places us in a solid position to move forward with our diversification through densification program. This was demonstrated by strong operational financial metrics.
These reflect our strategy that thus far has proven successful. We are also fortunate to operate in The Nordics, which is one of the most stable parts of the world and has outperformed in the COVID-nineteen environment. We believe in the diversification through densification potential and connection to our existing assets and have begun to work on transforming the portfolio. Capitalization on the densification potential not only diversifies the portfolio, but also is an opportunity to increase GLA with premises that create clear synergies with our retail assets. Value creation in these initiatives starts early in the process and decisions on execution of any development can be made later in the process.
We have in place a strong and capable organization to execute these plans in a manner we choose after our case by case assessment of each individual development. With that, I'd like to thank you and hand it back over to Laura.
Thank you, Scott and Era, for the presentation. And now we have time for questions, and we turn the audio line on. So operator, please go ahead.
We have a question from Antti Ki Binayini. Please go ahead. Your line is open.
Thank you, guys. Thanks for taking my questions. I have a couple of them, so I will I will take them one by one if that's okay for you. First of all, thanks for the COVID nineteen bridge that you highlighted now for the first time. Do you think that the effects will reverse in 02/2021?
Or what is your thinking on the brokers going forward?
Hi, Antti. How are you? I think I don't know if reverse is the right word. I think we see it stabilizing in Q3 as we look at leasing, which seems to be kind of a forward looking indicator. And sales have flattened or have basically come back to the 2019 level.
So I think, you know, I don't think there's a full recovery in 2021 that would bring us back to where our original plan was in 2021, but I do think it's stabilized and we should start to build upon where we are in 2020. So we're cautiously optimistic. We're not out of the woods yet. Who knows if there's a significant second lockdown? But we are cautiously optimistic as evidenced by what we're doing with our guidance tightening it and taking up the midpoint.
So we're feeling pretty good. But again, that's I put that big caveat out there about what might or might not happen kind of on a macro level.
Okay. Thanks. Then the second question is on consumer sentiment. We have seen really strong figures coming out in retail in your key markets on consumer spending, also in shopping centers. Do you think that this situation has supported you substantially during the week times?
Or how do you see the situation there? And also kind of do you have any ideas how things will play out when we enter into the next quarter or next year?
I think we have been the beneficiary of the fact that we are heavily grocery pharmacy influenced. And I think because of that necessity base, the consumers have sought us out even during the worst of the crisis. But that being said, as you mentioned, the consumer numbers are looking better and we are actually starting to see that even in the last month. Fashion apparel, was probably, at least in our portfolio, the most dramatically impacted through the worst of the COVID, that has come back. It's still not back to last year's levels, but it's instead of being down double digit, it's now down single digit in the last month.
So it does seem like the consumer is feeling better. And I would anticipate going into holiday season Again, I hate to be a broken record, but I'm going to put the caveat of assuming that there's not some big second lockdown kind of coming through.
Good. Thanks. And on the guidance, you highlight that you don't expect in the guidance, it's baked in that you don't expect a big COVID-nineteen second wave lockdowns coming. So basically, you have baked in a guidance that assumes that things remain as they are currently. Is this the right way?
This is the correct way to look at it, yes.
Yes. And I would add to that, Antti, obviously, we're already not halfway through the quarter, but we're pretty far into the quarter. So we feel pretty good about it.
Okay. Thanks. Then the last question is on your strategy and the development projects. Could you give us a little bit more flavor on how do you calculate and define the EUR 200,000,000 that you see value creation potential there? That would be really helpful.
Yes. Well, it starts with we take the portfolio and we went asset by asset and determined what the opportunity was for each of the assets in terms of densification and how much GLA could we add in each of the assets. And then we take a look at where do we think it's going to be more commercial versus more residential, and then we assign a value to that building right, if you will, depending on whether it's commercial or residential. And and that's how we develop it. It's it's very high level.
It's not a precise number, but we feel pretty good about it. And, I would I would remind you, this is only for the building rights. This doesn't even include what the upside is for us as we develop it.
Okay. So there are no development gains included in the figure?
Correct. This is this is just the this is just the the value created because of the zoning and and the acquisition of the building rights. At which point, you know Okay. And then and as said in the presentation, you know, after we get those building rights and and create that value, we can then make a decision. Do we sell them, do we JV, or do we build it ourselves.
Okay. And if you decide to develop themselves, could you kind of indicate us what's the investment cost of the development, that probably more than EUR 1,000,000,000, right?
Well, I can't imagine a scenario where we go build all this ourselves. So that's we just don't have the balance sheet to do that. We're going to be very mindful of that as we proceed, which is why at this point, we're prepared to talk about what the value creation is in the building rights. But in terms of the actual execution, we're not prepared to get into that yet.
Okay. That's very helpful. Thank you very much for the answers.
No. Thanks for thanks for calling in.
We have a question from Tobias Kai. Please go ahead, sir.
Thank you and good morning. I also would like to take I have some few questions and take them one by one, if that's okay. I would like to start with the rent collection of 93% in Q3. Is that based on gross rent or on net rental income?
This is based on net rental income.
Okay. And does that mean for the full year that you have some almost EUR 10,000,000 in outstanding rent receivables?
No. I don't think that we have that much, no. If you look at our cash flow, you see that we have a slightly higher negative working capital development, but it's not like EUR 10,000,000.
No, I see the change from last year is not that much, but the total negative effect on working capital is almost €14,000,000 What's that more than rent receivables?
There are, of course, many things like, for example, VAT receivables relating to the development projects. This is normally a big item.
Okay. And for the counterparts regarding your outstanding rent receivables, can you say something about the mix? What kind of tenants are mainly related to that?
I think that it reflects pretty much our average exposure. And as you know, we have clearly less fashion compared the other retail real estate landlords. We have like 25% of fashion. So I don't think that we have given any exact breakdown of where these receivables come from, but they are fairly representative to the our overall mix.
Yes. Maybe I can help you a little bit. This is maybe oversimplifying it, but how I think about the collections. You know, if we are at 94% year to date and we had roughly 2% in terms of rent concessions that were provided in Q2 roughly about 1% of our rent is was a part of bankruptcy. That gives you 3% of the six remaining 6%.
So we have about 3% of our outstanding to collect. So it's as I say, it's maybe oversimplifying, but that's kind of how I think about it.
Okay. Thank you. That's helpful. Also regarding your you reported that you have very minor negative impact on the turnover based income. Can you say how much turnover based income you have in total?
It's 2.9%. I don't know what the euro number is, but it's about 2.9%.
We are not disclosing now the exact numbers, but the percentage is approximately what Scott mentioned.
And is the turnover base rent related to some specific tenant groups or is it also widely spread?
I mean, it's such a small amount. It's, you know, there's a handful of tenants. I mean, H and M, I think, is
a tenant
that people broadly know typically does turnover based deals. There's it's only a handful of tenants because it's not a big number to begin with.
Okay. Thank you. And one question regarding your balance sheet. I mean, you include 50% of the hybrid, your net debt to total assets stands at 48% compared to 44% last year or at year end last year. Do you see a risk that you need to sell more assets to defend your rating?
Well, I don't think that it is only a risk. It is part of our strategy basically to sell assets. And there are the recent sort of news and noises from the disposal markets are actually very positive in the sense that disposal markets were entirely closed for like several months in the beginning of COVID. But now there has been recently transactions. And certainly, we also hope to be able to disclose at some point of time some noncore disposals, which, you mentioned, it's an important part of our strategy in reducing the leverage.
And can you give an indication of how large divestments you expect for the next twelve months?
As Eero said, we it is a focus for us. And I've said since I arrived here at Citicom that I'm I'm not in the business of predicting what the market will or won't allow us to sell. We're not distressed sellers by any means. That being said, I do think that, we would have some news for you, in the near term about a potential disposal. That's all I'm really can say at this point.
Thank you for taking my questions.
Just one correction on what I just said. The collection is based on gross rents, not on net rents, of course.
Okay. Thank you. Thank you.
We have a question from Nico Lavikari. Please go ahead.
Yes. Okay. Good morning, gents.
I would like to ask my questions individually as well, if that's okay for everyone. Maybe as the first one, regarding the Q3 leasing, can you comment a bit on what's happening with the leasing incentives that you're seeing? Do you see an increase with these given that you did pretty well in terms of signing new leases over the quarter? Thanks.
Yes. I mean, I think it's fair to say that the leasing market remains challenging. And I think it's more challenging dependent on specific categories. I would suggest to you that it's interesting when you look at our portfolio and you see sales are basically flat with last year. It's not I wouldn't interpret that as all segments of the business are flat.
It's We clearly have some winners and losers in this and they just happen to net out to be even basically. And the winners are, as you might suspect, grocery, pharmacy, sporting goods, gyms, home furnishings, those are the winning categories. And the toughest categories are fashion and apparel, restaurants are having and leisure movie theaters. As it relates to your question specifically about the, you know, the leasing activity and the incentives around that, we're getting more requests for that. However, we've been able to resist that for the most part and haven't had to give much more than we have done historically.
But but I'm not gonna I want to mislead you. It certainly is a challenging environment right now. And I think the tenants, even though they may be performing well in our portfolio, have other stores that maybe aren't performing as well. And so it's a bit challenging as we have those conversations. But again, because they're performing well in our portfolio, we've been able to hold the line somewhat.
And I would point to the 9.4 OCR that we have as kind of evidence of the performance within our portfolio.
Okay. Then a follow-up question, maybe for Era a bit more. Did you apply IFRS nine or IFRS 16 for the rent waivers granted during the COVID pandemic so far?
IFRS 16 is something we apply, yes.
Okay. In that case, can you provide later details on the impact from the straight lining in 2021 and onwards?
Yes. We are giving certain information on the straight lining. And figure that was provided in the bridge was the straight line number, but that's a good point. We will try to give additional more color on that going forward.
Okay. Maybe about the CapEx on Lip Buoliva Center. Can you give us some indication what we might hear more details about the total estimates given the residential bid? And also, can you comment on where the pre let is at Q3 twenty twenty end?
On the residential, we are currently in negotiations with third parties for the residential. I can't really provide
as you
might imagine, because we're in the middle of that negotiation, I can't really provide you much detail on that. As it relates to the letting of the retail premises, we are currently signed or at least with about 70% of the GLA. And we have another 10% that we're in active negotiations. Whether we get those resolved by the end of the year or not, I'm not I can't promise. But if you get those done, then we're roughly at about 80%, with about sixteen months left.
So we're feeling pretty good about the leasing activity there.
Okay. That's clear. Okay. Well, this one was already asked about the $200,000,000 on residential. So that's fine.
I think that's it from my side. Thank you.
We have a question from Dennis De Jong. Please go ahead, sir.
Yes. Good morning, sorry. So I see why the bottom range has been taken off the EPS guidance given that the COVID impact has been very limited. I was wondering why the top range of the guidance had been taken up, what the setbacks have been to make the decision to lower it a bit.
Well, basically, we just narrowed simply the guidance, and it doesn't mean that we are more negative, not at all, rather to the contrary compared to Q2 situation. This is a mathematical result of narrowing the guidance and increasing the midpoint and keeping. And last year, a year ago, the guidance range was €5,000,000 And yes, admitted 7,000,000 now this €7,000,000 is slightly wider than last year. But I think that everybody would agree that also the level of uncertainty is slightly wider than larger than last year. So this is really the background of how we did set the guidance.
And like Scott mentioned, we are already well into the fourth quarter. So we have a decent feeling that these are going to be very appropriate guidance levels.
Yes. And if you look, mean, this is we've tightened it considerably from where it was in Q2.
True. Thanks. Makes sense. You mentioned that no COVID discounts have been given in Q3, but I was wondering if there are currently some negotiations going on or tenants asking for it because they would be in distress or would face distress?
I I would say that there's always even in in, quote, unquote, normal years, you're always having some conversations with one or two tenants around their business and whether they need some assistance. And this time is no different than that. There may be a few more. And and whether you say it's COVID related or not, you know, I I guess, you know, we had this discussion yesterday at our board meeting. You you could argue that everything right now is COVID related.
We we tried to to narrow it to just those that are directly COVID related when we came up with the bridge. And I would point out that we we, I think throughout this entire COVID period, we've kind of led the way in terms of transparency and really tried to provide investors as much insight as we can into all of our KPIs. So this was our attempt to to be, you know, conservatively what we think are those impacts related from COVID. Again, you could argue that it's it's even greater than than what we've shown. But but back to your question, you know, we have some conversations ongoing with tenants.
It's not a significant number of tenants, but there there are some who have come to us, continuing to look for some help on the rent.
Thanks. And then to my last question, I reckon you make a risk profile of tenants at risk or facing COVID impact directly and may need to file for bankruptcy or are at a larger risk of going bankrupt. Do you provide a percentage of what amount of tenants you foresee to face this risk?
We don't because it's so subjective. My personal view is that I think those tenants who were at risk of bankruptcy have already filed. They that that occurred earlier in the COVID. I do think that in a normal year, tenants at this point, if they if they've made it this far, they're going to continue through the fourth quarter because that's when they're going to, see their, you know, their their greatest success, hopefully, in their business. But there tends to always be some fallout in January.
I don't have a sense of whether that fallout will be greater or less. You know, you could argue that it would be greater because it's a tougher business environment. On the flip side, you could argue that those tenants who were weak going into COVID have already been kind of flushed out. And so therefore, maybe you won't have as much in January. But that's kind of the normal cycle of retail throughout the years.
So I would say right now that list isn't particularly that much larger. I think there may be certain categories. Movie theaters, that's a tough business right now. And and, you know, you've got to see what happens with movie releases, etcetera. But but right now, I I I wouldn't say that we feel like there's any greater risk than it would be kind of in a normal year.
And in terms of numbers, we have approximately EUR 3,000,000 of credit losses and credit loss provisions, like mentioned, and most of them are provisions and very few actual losses so far, and this compares with approximately EUR 1,300,000.0 last year at the same point of time. And our process continues to be very conservative and rigorous when provisioning against this.
That's a great point. These are provisions and not actual losses for the most part. So we really trying to be very conservative.
Thanks. That helps a lot. These were my questions.
Thank you.
We have a question from Carla Finn. Please go ahead. Hi, good morning. Just one question on the densification. I just wonder, do you have a timeline as to when the 65% of retail exposure will be achieved?
Is that in five year time or three year time? Thank you.
Think I'm looking for what's the slide number? I think well, the the actual percentage change will be upon the execution of this. So we do have a timeline in the deck that shows when the building rights come online. And typically, it's there's, you know, once you get building rights, there's another, call it, two two years to to get it fully kind of built out. So if you took, I guess, if you took that that timeline for the building rights and applied two years to that, you know, that kinda gives you a sense of how this flows.
But that's very rough. I'm not you know, it's it's I don't have anything more precise than that at this point.
Okay. Thank you. I remind you that if you want to ask questions, you will have to press 01 on your telephone keypad. There are no further questions at this time. Please go ahead, speakers.
Thank you very much, everyone. We really appreciate your time. And if you have any other questions, feel free to reach out to us.
Yes. Thank you.
Thank you.