All right. Good afternoon, everyone, and a warm welcome to Citycon's Capital Markets Day 2019. We are here in Stockholm, so warm welcome to those who made the journey here in Stockholm, in Kista. Also warm welcome to you who are following the event via the live webcast. My name is Mikko Pohjala, and I'm the Head of Investor Relations and Group Communications. We started today already earlier today with asset tours of two of our assets, Liljeholmstorget and Kista Gallerian. Now we have an interesting afternoon ahead of us where our current management will talk about the current focus areas of the company, as well as the long-term strategic ambitions. As you all know, Citycon is one of the leading manager, owner, and developer of shopping centers in the Nordics. We have a pan-Nordic reach.
We have 38 shopping centers in all Nordic countries, plus Estonia, which generate a footfall of 170 million people per year, and this we'll talk about more in detail with Scott and how that adds to the stability of our business model. In general, we also have a very stable business model and a diversified tenant mix, meaning that we're less reliant on fashion. This is also one of the topics that we want to convey to you today, that we have a very stable business model. Thirdly, we have a very balanced portfolio across the Nordics, as I mentioned, with a lot of densification potential, and that will be also one of the focus areas that we'll discuss today. What can we do in the long term with the portfolio? How can we densify our assets with further building residential and offices?
Today, we will welcome our relatively new CEO, F. Scott Ball, on the stage. He'll start the day and the afternoon with talking about the focus area, short term and long term. This will be followed by our Chief Operating Officer, Henrica Ginström, who will give some concrete examples, what have we been doing with our portfolio, and also talk about the increased focus on asset management. That will be followed by a coffee break at 2:30 P.M. for 30 minutes, and the second presentation will be kicked off by Eero Sihvonen, our CFO and Executive Vice President, by talking about our solid financial base. The afternoon then will be concluded by our new, three weeks in at the company, Erik Lennhammar, our new CDO, who will talk about our development pipeline. A few practical things.
There is a possibility to ask questions here in Kista after each presentation, so we'll take a Q&A session after each presentation and then at the end of the day still, if you have any further questions. Still, in a nutshell, we have, as you know, a relatively new management. Our relatively new CEO, F. Scott Ball, started in January. Henrica as our Chief Operating Officer also in January. Of course, we have still Eero, who has been with the company now for almost 14 years. Then we still have Erik Lennhammar, as mentioned, our CDO, who started three weeks ago. Without much further ado, I warmly welcome Scott to the stage to talk about the focus areas of the company going forward.
Great.
There you go.
Thanks, Mikko. Thanks, everybody. They gave me the slot right after lunch, make sure you guys' bellies were full. They made the room nice and warm, you'll feel really sleepy and I'll do my best to not put you all the way to sleep. Hopefully, you enjoyed the tour this morning. You saw our two largest assets in Sweden. The first one, Liljeholmen, is obviously a great asset that has potential to become even greater. The second one, Kista, is a great asset, it is in a bit of transition. You saw what was a former vacant department store that's been converted to two grocery and H&M concept upstairs. We have a lot of moving parts happening in Kista right now. What's undeniable about Kista is the traffic. You guys saw it yourselves firsthand.
When you get 18 million people walking through a shopping center, you have to try really hard to not be successful there. We're really excited about what's happening with this project. It also has the opportunity to be further expanded and the site densified, which we'll talk about in a little bit. You also got a chance to meet some of the broader team, and I think that's important. As Mikko mentioned, we have a relatively new management team here, save for our CFO, who is part of the inventory and has been the rock here at Citycon.
One of the things we've been talking about a lot with our new management team is shared leadership and really trying to push the decision-making out further into the field and really empower people to do more with their shopping centers and to really think about these assets as if they own them. Henrica's going to talk some more about that in the asset management piece of this. I think it was good that you got a chance to meet some of those players. You got to meet Veronica, who is working with Erik on the development, Magnus and Mehmet and Isabella. Many of them are new players, so you get a chance to get a feel for what the new persona of Citycon is with the new hires that we've made here.
In any event, without further ado, let's talk about what we're here for. Briefly today, I'm going to talk just for a few minutes about the current retail environment. This will be redundant for some of you who sat with me at dinner last night. We had a very robust conversation around this, but I think it's instructive just to give you a view from our perspective. Obviously, the press has written lots about what's happening in retail. I think it would be helpful for us, for this room, if we gave you our view. I'm going to talk a little bit about our business model today, talk about what we've been doing in the short term here, this last nine months, to really try to impact the business.
We'll get into what the longer-term opportunities are for the portfolio and where we're trying to take it. I think that when you think about what's happening in retail today, I think it's instructive to take a look at what's happened in the U.S. Obviously, I may be a bit biased because I come from there, but I think, one, I have some knowledge of it, so I can speak to it a bit. Secondly, I do think what's happening there is where the world is going. I think it's instructive to take a look at it a bit. Indulge me just for a minute as I provide some thoughts around the U.S. versus the Nordics.
I think on a macro level, if you really step back, when you think about the headwinds in retail, I would suggest to you that based on my own experience, the headwinds may be a bit more like a hurricane in the U.S. I live in Florida, so hurricanes are top of mind given all the stories about Hurricane Dorian there. As compared to the U.S., I think the headwinds here are more like a gentle breeze, if you will. You start with the fact that the capacity in the U.S. is significantly higher on a per capita basis than it is here in the Nordics. Almost four times, more than four times what it is here.
We're starting, when you compare and you think about what's happening in retail in the Nordics, you have to think about the fact that we don't have the overcapacity that they have in the U.S. or that they have in the U.K. or in parts of continental Europe. We just simply don't have that level of competition. I think this slide is actually a bit instructive. The mall on the left is a mall that used to be in my portfolio. I think it's pretty indicative of a regional shopping center in the U.S. It is very large. It's a bit larger than our shopping center on the right, Iso Omena. If you take a look at what makes up this shopping center, you start with the fact that there's four department stores.
You've got four large boxes that are basically geared towards fashion as the anchors for the shopping center. You contrast that with our shopping center, which is very typical of what we have in our portfolio, where grocery really is. We have three grocery stores that make up the anchors of this shopping center. The other big anchor in Iso Omena, and again, you saw it today at Kista, and you saw it at Liljeholmen. A big anchor for us are these transportation hubs and these metro stations that we either sit on top of or attach next to. You think about the football that those. If you think of anchors as somebody who drives traffic to your shopping centers, there is no better anchor than these transportation hubs.
Iso Omena alone, we get 20 million people that come through this shopping center. A lot of that is driven by the fact that you have this transportation hub. The challenge for us and for our retailers is how do we convert all of that foot traffic into consumers, and how we convince them to buy, and what are we doing to try to make that connection. The other thing I'd point out is, typically, shopping centers in the U.S. are basically car-based. People drive there. They're more suburban, so they're not nearly as dense. If you look at the map there, you can see these are all subdivisions. These are all individual single-family homes, though it looks like it's green, but there's just not that many of them compared to, you look at the density around Iso Omena.
Our portfolio in particular sits in the middle of some very densely populated areas, and we have the benefit of that. If you think about what's happening in retail, beyond this comparison of why we're a bit different, you also have to talk, obviously, about the Internet and what's happening with that. I think all the press would lead you to believe that the Internet is taking all the market share away from bricks and mortar. The reality is, bricks and mortar sales are climbing. I think the story is, and some of you have heard me say this in other conversations we've had. I think the reality is that when you talk about the Internet and its impact on retail, the group that's feeling that most significantly is fashion.
Fashion has borne the brunt of the impact of this. It's primarily because there's so much transparency to the consumer now in terms of pricing. The consumer can shop on their phone. They know if you're selling somebody else's brand, there's probably five other guys in the shopping center selling that brand as well. The consumer can now shop on their phone and figure out where they can get the best price. It's a race to the bottom in terms of pricing. If you're vertically integrated and you're producing your own, you're in a much better position because you can control pricing. If you are somebody who's a multi-brand operator, which is what a lot of department stores, almost every department store is, those are the guys who have been significantly impacted by what's happening on the internet.
Again, I think the punchline is, and the thing I would like you to remember is, bricks and mortar sales are actually still growing. Yes, online retail is growing at a faster percentage, but it's starting from a much lower base. Again, this makes the point a little bit of what I was just talking about. If you look at what's happening here, in terms of online sales, it's really fashion that's borne the brunt of this. I think, again, the other punchline in this is, if you look at the retailers who are successful today, even the retailers who are in fashion, they're retailers who have embraced the catchphrase is omni-channel, but it's retailers who are trying to be as convenient as possible to the consumer. They're trying to meet the consumer wherever the consumer wants to shop.
I would suggest to you that most consumers are not monolithic in terms of their shopping pattern. Most consumers shop on their phone, but they also shop in stores. It's proven out that where you have a physical store and an online presence, your online sales are going to be higher where you have a physical store. The reverse is true, too. Every smart retailer today, and almost every retailer today, even the not-so-smart ones, have begun to embrace this idea that we have to have an online presence, and we have to have bricks and mortar. We can't just be one or the other. Because those are the retailers who are not going to survive. I think that's the punchline here. Physical stores remain really, really important. There may be fewer of them, and that's what's happening in the U.S.
Where you had overcapacity, you have stores who are reducing the size of their fleet because they don't need as many stores now to service the customer because they have the ability for the internet and their presence on the internet to take care of those stores that were maybe marginal in terms of their profitability. It allows these retailers to actually close unprofitable stores, but they got to keep their profitable stores, which makes those stores even more important to them on a go-forward basis. We'll talk about that in a little bit. It does impact the way you think about the business today, the way we think about the business today, particularly when you think about leasing and you think about OCRs. I've heard some of our peers talk about the fact that OCRs are no longer relevant. I think that's an oversimplification.
I do think the way you think about OCRs has to be different today. The level of OCR that a tenant can afford is higher today because that store is not only servicing the sales that originate and end in that store. They're also servicing the online sales that occur in that market. Therefore, these stores can afford to pay a higher OCR because they're not reporting those sales that didn't occur in the store, but the store services. The sales metric is a little bit skewed today because there's greater transaction activity occurring at those stores. The stores really become kind of that last-mile distribution fix for these retailers. Stable business model. Stable and retail are not words that we hear together in the same sentence much these days.
I'm going to explain to you why, at least with our portfolio, we believe this to be the case, and I think it's been proven out in our results of late. We already talked a little bit about the fact that public transportation is an important anchor for us. 170 million people a year coming through these shopping centers. Again, I've heard the phrase, we had this argument at dinner last night. The phrase, is footfall the new currency? I don't know. I'm not smart enough to know that. I do know that if you have 170 million people walking through a shopping center, your chances of success are pretty daggone good.
I think when we think about our portfolio, and we think about those factors that contribute to the stability of the business, when you have that kind of footfall walking through your shopping center, and this footfall has not declined. The footfall has stayed fairly constant for us, and we've grown it in some shopping centers, but by and large, on a like-for-like basis, footfall has stayed pretty stable. If you look at this portfolio, we've had 28 straight quarters of our occupancy staying within 100 basis points of 96%, call it 96%. It just doesn't move that much. I'm going to talk a little bit about why I think some of that is the case. Again, when you think about our business and we talk about how stable our business is, this is one of the things that we point to.
I think you have to look at occupancy in the context of what you're doing with rents at the same time, right? You could get 100% occupancy if you gave your space away for free. Or if you held the line on rents and just you were going to jack rents, you could drive your occupancy to zero if you wanted to. It's a little bit of a push-pull. I think the fact is that this portfolio has a very stable occupancy rate, and relatively high at 96%. I think this is a really interesting slide and one we've been using internally. It suggests to you that we have room to grow. It doesn't tell you that we've been doing a great job so far, but I think we have real opportunity here to start to push rents.
Henrica's going to talk about this a little bit in terms of, some of you met Jussi last night at dinner, and on the tour today. We've altered the structure of our leasing team. We have a lease committee, which Henrica will talk about some more as well. We've changed the way we're approaching leasing within the company. I do think we have an opportunity here to start to push rents, relative to our peers, because I think we're too low. Another factor that I think contributes to the stability of this company is the fact that 85%, something like that, of our rents have some form of indexation attached to it. I think the average across the portfolio is about 2%. Think about that for a second. The vast majority of our revenue has growth built into it.
Again, it contributes to this, you have a very stable occupancy level. We have the room to grow some rents, and the existing rents have some built-in growth to them. All of that leads to what we call the stable business model. This is an interesting slide, and the next one kind of reinforces it. We talked just a few minutes ago about fashion and how it's been impacted by the Internet. When you take a look at our business platform and our tenant mix, and this idea that we have this stable business model, we have a lot less exposure to fashion than our peers do, about half as much. This isn't all great news on this slide, but there is some opportunity within this. I think our food and beverage is too low, and we're trying to push the needle on that.
What is also interesting on this is we have almost zero exposure to department stores. We have one department store in our entire portfolio. We have a fair amount of service. When we talk about service, we really are talking about municipal services. I'll talk about that in a minute. Again, this reinforces. If you look at this, our peers, most of their top 10 retailers, I think 80% of their top 10 retailers are fashion-oriented. If you look at ours, it's almost the reverse. Talked just a second ago about the municipal services, and we include in that the alcohol monopolies in each of the countries. Today, this business is now 6%, but it's a growing piece of our business.
We announced, just about a month ago, I guess, in Trio, that the city of Lahti was going to take 1,000 meters from us on the upper level. These municipalities, 1, they're well-funded. 2, they have great credit. 3, they will pay you real rent, and they will take space that isn't prime retail space. Iso Omena is a great example. The entire third floor is basically municipal services and healthcare. That's a growing piece of our business. It's a business that we are pursuing in almost all of our shopping centers. We'll talk a little bit about Leppävaara, which is coming online, and how I think there was just a press release today that the city approved the library to be in Leppävaara. This is a real piece of our business.
We have a stable business, the new management team came in and said, "Okay. What can we do? How can we improve this stable business? How can we make it better in the short term? What can we immediately impact?" Henrica, and the team, and again, some of you, I apologize, we've talked about this in other functions, but we have reorganized almost the entire company. We have made significant changes in how we are structured, and we've made significant changes in terms of key personnel. All of that was geared with an eye towards how do we improve the asset management function at these shopping centers, and how do we improve the results at these shopping centers. We're seeing some of those results start to make their way into the numbers now.
I would suggest to you that 2020 is where we'll begin to see kind of the full-year impact of that. You're already seeing a little bit of that in the numbers through the first three quarters. If you think about what's working today, we talked about the business model. I would suggest to you that we have some real talent in this organization. Again, you got to meet some of those people today, and I am very impressed with our team. I think we're going to talk about this a little bit more in a minute, you have a portfolio that has real opportunity for densification and growth. Again, the two centers that you saw today, we talked about the opportunities at each of those properties. By no means are they alone. We have a portfolio of opportunities, which we'll talk about in a few minutes.
I think if you think about where the focus area is for us on a go-forward basis, we're already working on the asset management initiative piece of this, but it's also the development organization, and we'll talk about that also in a minute. We made the first big step in hiring Erik, who's been with us for a few weeks, and some of you got a chance to meet already. Then it's also looking at how we allocate our capital, which we'll talk about in a second. Then it's also different asset management initiatives. I don't want to go into too much detail because I don't want to steal Henrica's thunder, but you can see a couple of those on the slide here. On the asset management initiatives, again, I'm not going to get into too much detail, I promise, Henrica.
It's really taking advantage of our size and scale and how do we really start to position ourselves as a true pan-Nordic player? How do we look at cost control? How do we look at CapEx, and how do we begin to control that CapEx spending? As you can see, we've done a pretty good job so far in 2019 in terms of bringing that down. Then it's also looking at the revenue side of the business and how do we improve the leasing function? How do we improve specialty leasing, which we think there's real opportunity for. Speaking of specialty leasing, some of you met Kathrine, who is our head of specialty leasing. It's a new position that we created at the beginning of the year.
If you have not met her yet, I would suggest that you spend a few minutes with her before you leave today, because if you don't believe that it's a business for us, after you spend a few minutes with her, you will definitely believe because she has a tremendous amount of energy for it, and we're really excited about what she's going to do with the company here. If you walk through Kista, you saw all of that foot traffic, and some of you heard me say this on the tour. If you think about Kista and how valuable that real estate is, the stores on either side are very, very valuable. 18 million people are walking through the middle of that shopping center.
If 18 million people are walking through the middle of that shopping center, that middle is the most valuable real estate we have inside that shopping center. I would suggest to you that we have not, up to this point, done a very good job of capturing the opportunity, either from a specialty leasing or common area leasing standpoint or from a marketing standpoint. I think we've done a better job at some assets than others. If you go to Iso Omena, you'll see a more developed specialty leasing program there. We need to take that and replicate it across the portfolio, and Kista is an obvious one for us that we just have not taken advantage of yet. We will. What does all this mean for 2019, anyway?
As you can see, the midpoint of our guidance is slightly ahead of 2018. We are projecting some level of growth in 2019. Again, as I suggested, I think that the full-year benefit of the work that Henrica and her team are doing will really be seen in 2020. Okay, that's short-term. We got a stable business model. Short-term, we have some initiatives that we are working on to try to improve results immediately. The real long-term opportunity in this company lies in the densification opportunities of these assets.
When we step back and we think about how we might allocate capital going forward and where we might get the biggest bang for our buck, frankly, I am of the belief that we have some amazingly strong assets, and it would be much wiser for us to invest in those assets and improve an already strong asset than it would be to go out and buy another portfolio or to buy somebody else's assets. I've been to that movie before when I was at Starwood. We built that by buying other portfolios. It's fraught with risk, I will tell you, because there's things that the seller knows that you just don't know. I think, being the buyer and the seller on both sides of this equation where we invest in our assets, we know everything there is to know about these things.
These are already very strong assets. I want to talk about that for a minute because there are a lot of our peers who talk about densification and talk about adding resi or adding this, and many of them talk about it as a fix to retail that's maybe not working that well. I would suggest to you that what we are talking about are assets where the retail's working just fine. We have a very stable retail business there. We have an opportunity to add to it. We're not taking retail and converting it into something else. This is about how we can add to an already existing great shopping center.
When we think about the portfolio, we just went through an exercise where we looked at our five-year models, there were factors that we determined were critical for us as we examined each property and decided whether we were going to invest or not invest more money in that asset. These were the factors that we came up with. Again, most of these are not going to be a surprise to you, but it's the opportunity for NRI. It's whether we can add to it. It's what kind of CapEx is going to be required at this asset. Is it top one or two cities? Is the location in a densely located area that's almost irreplaceable? What do the demographics look like in that area? Connection to transportation, a big one.
I would suggest to you, again, this kind of dovetails with also the stable business platform, but I think it is interesting when you look at our portfolio as compared to where it was in 2011. We have less than half as many assets, but the average size is almost four times the average size. I think we're beginning to reap the benefit of that in terms of our results, because we have shed most of the weaker assets, and we have shed most of the assets that are in the smaller markets. I would suggest to you that while our portfolio is not pristine today, it's in pretty good shape. We have a pretty nice portfolio. Oh, sorry. Looking at that even further, seven of our assets make up half the value of the company. You've seen two of them today.
I think this is, again, a very telling slide, and I would suggest, if you look at the football numbers on there's some pretty impressive football numbers as well. 20 million people at Iso Omena is nothing to sneeze at. In terms of where we're doing business and what's happening in those markets. You guys know this as well as I do. You read all the same studies. Basically, urbanization is only ramping up. It's only growing stronger in the Nordics. If you look at where it's projected to go in the countries that we operate in, this urbanization effect is really pretty pronounced, particularly in all the countries we operate, less so in Estonia, but they're all projected to be over 90%, which is a pretty amazing number.
If you layer that onto where our shopping centers are, almost 85% of our shopping centers are in the top two markets in each of those countries. Our portfolio is heavily concentrated in these urban areas where the population growth is projected to occur, where it is occurring now and where it's projected to occur. Looking at our portfolio and what the opportunity might be. Today, we are kind of, sort of in the resi business. We have 500 units, so it's a very, very small amount. We have a little toehold in that business today. If you look at the opportunities, this is based upon our current zoning rights and initiatives that we're working on.
This doesn't take into account other opportunities that we may realize as we really start to cull through the portfolio and work harder to try to dig this out. I'm talking about resi, but this densification doesn't have to be resi. We're talking about resi today because we have a lot of resi developers who are reaching out to us proactively, looking for the opportunity to try to buy resi rights from us. I'm certainly not the smartest guy in the room here, but I'm smart enough to know that if a resi developer's calling me because they want to buy resi rights, then there's some value in this portfolio that we need to go harvest. Today, if you look at it, as you can see here, we've identified the opportunity to build 4,500 units within the existing portfolio.
As I said, some of this is not new news for us, but I think what I'd like you to realize is that we are beginning to take the steps necessary to begin to harvest this value. The first big step, again, was hiring of Erik. Erik and I have already been working on how we frame up the development team and what resources we need to add there. With that development opportunity, there's several different ways, obviously, for us to try to capture the value of that. I would suggest to you that up until this point, we've really been focused on the third alternative there. We've been selling these rights. Most recently, we sold rights in Columbus. I think we got EUR 9.4 million. They're going to build how many assets?
900.
They're going to build 900 apartments adjacent to the shopping center. We didn't take any risk, and we got some money for that. We will still get the benefit of those 900 units being built immediately next door to our shopping center, so Columbus will still benefit from this transaction. We did give up some upside because we sold those rights to Skanska and Bonava. We are beginning to take a look at options 1 and 2, and each of the opportunities that we have in the portfolio, which of those 3 is the right one for us. I'm going to suggest to you that it's probably some mix. I don't see us doing everything ourselves, certainly not today, because we don't have the infrastructure. I also don't see us, going forward, just selling all these rights off and giving all the upside to somebody else.
I think you're going to start to see us have some blend of this. This is a project you guys saw today, but I think it is a bit instructive when you think about our portfolio in this densification effort. You guys all walked out into the park, so first of all, you saw the neighborhood, you saw how dense it is, you saw how attractive it is, you saw what the opportunity could look like. Well, you met Veronica, who is running point on this for us from a development standpoint. She has relationships with the city. I would suggest to you that she has great relationships here in Kista as well, where she sits on the board, the planning board for the community. The opportunity is apparent to us here. You have a shopping center that is almost 100% leased.
I think there's one space that we don't have a lease signed on, but it's basically 100% leased. Very successful. Already dense around it. We have land adjacent to us where we can do some further development and provide some densification. We're looking at resi, we're looking at hotel. Those are kind of the two things that we're focused on here. Potentially some office. Leppävaara. This is a ground-up development in Helsinki, in the city of Espoo. This is going to be a fantastic project. It's interesting because you have the transportation in the basement, that is already underway. That construction is already underway. On top of that, you will have two levels of retail. On top of that, you will have a level of services. Then we have eight residential towers that are programmed for the shopping center. This is a massive project.
Again, it's interesting. We have almost every resi developer there is approaching us trying to do something on this site with us. If you know this market or this area at all, it's dense, but it's about to get a lot more dense. We have a very good relationship with the city of Espoo, and I was with the mayor, and we talked about this Leppävaara area, and he really envisions it becoming the core hub of Espoo, which is pretty interesting when you think about the other parts of the city in terms of what exists there today. These eight residential buildings will have 450 units. They're going to be attractive to either renters or buyers because you're connected to transportation. You literally can go downstairs and never have to go outside if you want to get on the train.
You're going to have all the goods and services right at your fingertips. It's going to be a very impressive development. Opening spring of 2022. I assume that's the next question. When we think about the portfolio, again, we've got a great business model, stable business model. We're going to invest in our own assets. We're not out looking to buy somebody else's portfolio. We think this densification opportunity is going to pay off for us. We think there's a lot of upside with it. Excuse me. Too much talking. It's going to allow us to begin to diversify ourselves a bit as well. I think that when we talk internally about what Citycon looks like in the future, we really do view ourselves as a mixed-use developer. Again, Leppävaara, I think, is a good example of that. It is not just a retail project.
It's a retail project with a huge amount of resi attached to it, connected to transportation. If you look at these development opportunities in our pipeline, a lot of them don't have any further retail being added to the shopping center. A lot of our development will not necessarily be retail-related, even though it will be connected to retail. We're going to really, truly become a mixed-use developer. I guess a picture of Kista, just to, again, remind you of what the density of our markets look like. Veronica talked a bit about what our development opportunity is here, but as you can see, this is smack in the middle of a very densely populated area. Closing this out. I think in a changing retail environment, we are pretty well positioned here. I like where we're at. I like our portfolio.
I think we have a stable business model, but we have the opportunity to do more with it, even in terms of how we're managing the assets, which Henrica will talk about in a bit. I think the long-term opportunity for us is pretty significant, and I think that's where you're going to get real growth out of this portfolio. With that, thank you. I'm happy to take questions. I would suggest to you if they're very detailed questions about asset management or development or even the finances, you might want to wait until the other speakers, because there'll be a chance at the end to ask questions broadly as well. I'm happy to take any questions in the meantime.
Sure. Shall we start with Miriam, please? Please speak to the mic so that the listeners also on the online hear you.
Push the button?
Yeah.
Okay. Hi, my name is [Miriam Maynad]. I work for LaSalle Investment Management.
Hi, Miriam.
Hey, nice to meet you. My question is, I find you have a very interesting portfolio, well-connected to public transport. What struck me was the growth in footfall or the fact that it's pretty stable and the fact that the population or the densification in capital cities has already grown so much. Why do you think that even further growth of urban cities?
Why isn't our footfall growing?
Yeah.
Why is our footfall not growing?
Why are you not catching that, and what does that do to your reversion?
What does it do to what?
Your reversion. Your reversionary potential.
Yeah. It's a good question. I would suggest to you that we should get more of it. I think, you talked about the light rail being added today. I think when that occurs, we'll get a pop there. I think when you look at how people Again, I think we'll see, we saw a big pop at Iso Omena. We went from EUR 12 million to EUR 20 million when the train opened up. I'm not sure, unless employment changes a lot, because what happens, a lot of people use these trains to get to and from employment. Unless something is happening significant with employment in the area, you may not see a big movement up or down. You could see, if a lot of employers left the area, then you might see a drop in that. I don't think we've seen a big pop in employment here.
I think the bigger challenge, quite frankly, is I appreciate the question, and I'm not downplaying it, but I think the bigger challenge for us is how do we get a better conversion rate. If we have 170 million people coming through, how do we do a better job of converting all of those bodies into sales in these shopping centers? How do we make sure that we are providing what the consumer is looking for? I was talking to somebody today as we were walking through Kista, and we talked about the fact that we were gonna add some specialty leasing in the common area.
We just had this conversation around, well, coffee would be a logical one because people coming to and from, they want to grab a coffee, but you have to make sure it's not a coffee. It's not Espresso House where you have a queue for 5 minutes because that's just not going to work. It has to be coffee that you can grab and go. How do we position these retailers and how are they going to cater to the customer? For me, I don't lose sleep over the fact that EUR 170 million is fairly flat. What I lose sleep over is how do we do a better job of getting the right merchants and trying to get a greater conversion rate.
If you have 170 million footfall, we have I can't do math that well, but I can do this one, 340 million eyeballs. When you think about how marketing folks think about advertising, et cetera, there's real opportunity also for us to begin to maximize that. Some of you met Peter, who is our brand new head of marketing, and that's one of the challenges he has. How do we take marketing and make it a profit center for this shopping center, I mean for this company? I appreciate, I understand your question. I'm not losing sleep over 170 million people staying flat. I'm losing sleep over how do we get better conversion. I do think we'll get some growth when we add light rail to a couple of these. Clearly when Leppävaara comes online, that's gonna pop our overall total.
It won't pop the like for like, but it will pop the overall total as well.
Simen, you had a question.
Yeah. Simen Mortensen from DNB. In terms of the residential development you're speaking of, could you help us a bit. First of all, on the time frame, are you considering build to sell, build to let? How much will you eventually see residential be on part of the portfolio down the road? Will you become fully mixed use or will you be a shopping center with some spices with residential? How much will be office also?
Right.
We haven't spoken about that much.
Right. It sounds as though you've been sitting in our strategy sessions the last couple of weeks. Those are all very good questions and all questions we're asking ourselves quite frankly. Remember, our new head of development is three weeks in. Is it three weeks or two weeks? Three. Okay. Three weeks. I don't know why he doesn't have the answers to that yet. No, those are all the questions we're asking ourselves, quite frankly. From a timing standpoint, Leppävaara is probably the most pressing because it is right in front of us, and we have to make some decisions around the building of these towers. We are undergoing a pretty thorough examination of. We have several different models that we're running in terms of what's. Again, we have eight buildings. There's 100 different ways you could try to do this.
It could be you sell 2 and you develop 4 yourself and JV 2, you do 7 rentals, you do 1 condo. There's all these different variables, and you put them together, you come up with all these different variations. We're undergoing the process right now of running through these models, trying to make sure that we do this in the most effective way, but also trying to manage risk. You could say, "We're going to do it all ourselves and we're going to make it all rental." That's probably going to get you the biggest return, but it's also the greatest amount of risk. If we start to think about this, how do we mitigate some of that risk?
How do we take some of those chips off the table and yet preserve some of the upside for ourselves, and knowing that we don't have all the resources we need in-house today to do this all ourselves. That's the other factor. We're trying to build the team. This is almost like the conversation we had at the beginning of the year when we were talking about asset management. We talked about the fact that we were trying to build the team at the same time we were trying to implement all of these changes. I think the analogy I used was we're trying to build the plane while we fly it at the same time. That's a little bit of what's happening right now with the development team. I think from my perspective, we have asset management squared away. I think we have the right horsepower.
We have the right people in the right seats. Henrica's got control of it now. We're doing all the right things there. Now my time energy is going to be spent with Erik and really trying to take that next step for our company and look at how we develop this, how we create or implement this development organization that we need to put in place. I apologize, it's not a very good answer because it's let me come back to you. Those are all the things we're thinking about, all the things we're looking at right now.
From the outside, of course, doing these developments is you need CapEx. You touched upon that, and you said you're going to invest in your own shopping centers as well.
What will be most important for your company in terms of your CapEx needs versus also dividends, which is important to shareholders? Will it be that strong focus on dividends going forward, or how do you think in terms?
Yeah
your growth emissions you're communicating here and now?
Yeah. I'll let Eero address it more detailed. I would just suggest to you that the dividend is, it's not being contemplated to touch the dividend. The dividend is, I don't want to say it's sacred, but we're committed to the dividend that we have discussed. We are looking at a number of options as it relates to how we might finance this growth. I'll let Eero talk a little bit more about that.
Maybe as an addition, of course, the dividend level is a question to the board in a way. Of course, they take a view, but as Scott said, we're committed as we now see. Rob, please go ahead.
I don't think Green Street's allowed to ask questions.
It's an easy one.
Okay. Easy, I'll take.
Very interesting, your comment on OCRs and how they need to reflect some of the online sales. Question is, how are you going about trying to capture that?
Yeah. One, we're trying to educate our own people. Again, you have to understand the way this industry has worked for as long as I've been in the industry, which is a long time, as you can tell from the white hair, is that retailers could afford to pay you X% of their sales. When you sat down to negotiate, you both kind of knew within a range of where the rent had to be. Today, as we talk to and try to educate our leasing people, if that's the model as a landlord, if you use that same model, then you're not getting the full value of your real estate. Let me put a caveat. Assuming you have good real estate.
If you have bad real estate, the conversation's been turned on its head a bit, and you're struggling to even keep the OCR that you had or keep the tenant even. Fortunately for us, we have good real estate. The conversations now are, how do we begin to push those rents further? I would suggest to you that I don't have all the answers yet. We're trying to gather as much information as we can in terms of that tenant's online sales, how much of those sales are being generated within the trade area or the catchment for that shopping center, so that we at least have some level of information from which we can begin to make an educated decision about what we think that tenant could afford. Surprisingly, the tenants are not volunteering that to you. We have to go out and get that information.
I would suggest to you, we don't have this perfected yet. I think the first step is identifying the fact that the old model, I guess you can rely on it, but then your rents are not going to be where you should have those rents. There's a lot of work being done with our leasing team on this, and a lot of education of our own leasing people. Again, I don't want to steal Henrica's thunder, but I would suggest we also have changed the way leasing operates within the company so that we have this weekly lease committee, where these conversations are occurring, which is different than the way the company operated before. Again, I don't have all the answers, but I know what the questions are. At least I know what the questions are.
We know the questions that we're asking ourselves at lease committee and how we're trying to better position ourselves with the retailers so that we at least are operating from a greater base of knowledge than we have today.
That's great. Any further questions? Please go ahead, Tobias.
Tobias [Kail] from ABG. Regarding your occupancy cost ratio, which you mentioned is 9.1%, how big is the difference between different segments and how high is it for grocery, for example?
Obviously, grocery drags that down. I don't have the specific number in front of me. Grocers typically pay you a lower OCR than other retail. It would be a drag, but I do think as we looked at it, I think we believe there's probably another 150 basis points-200 basis points opportunity for us, to try to move that needle. You're not going to do it overnight. I don't want to suggest to you that's going to happen. I do think at least directionally, it points us to where we should go, and it gives us a target for our leasing people to start to think about. I think if you look at the company in the last few years, our rent spreads have been not great. Our occupancy has stayed stable.
It goes back to this trade-off of how far are you willing to move on rents in order to preserve occupancy or vice versa. I don't have the exact breakdown by segment, but I think overall, there's probably 150 basis points room for us to improve on that number. Each year, you get roughly 10%-15% of your space. You get another crack at or bite at the apple, if you will. If we can start to nibble away and make some inroads there, then it could be very meaningful for us. We have to do it. It's one thing to talk about it and identify it, but we haven't done it yet, so we have to do it. You guys should hold us accountable for that.
Also, if you will increase your share of revenues from municipality service, will that have any impact on your average rental income per square meter?
It would only because, remember, they will pay you market rent, but they're taking 2 or 3-level space. Like a trio, they're taking the upper level, which there's no great access to that level. By default, whoever you put in that space is going to pull down your average for the shopping center because it's the less desirable space. What I would suggest to you is that it's not going to pull you down more than the ERV for that space. We're getting market rent for that space, but it is less desirable space. By definition then, it's going to be less than the average because it's not the most desirable space in the shopping center.
Okay. Thank you.
One more question maybe before we let Henrica take over, if there is any. Good. We thank you, Scott, for the excellent presentation.
Thank you, everybody.
We welcome Henrica Ginström on the stage to talk about our increased focus on asset management. Please go ahead, Henrica.
Hello, everyone, and welcome also on my behalf. Maybe a few words about myself first. I've been eight years in Citycon. Many of you maybe remember me as the investor relations and communications director. Since then, I have been in Norway, living in Oslo, being a commercial director and responsible for one of our property portfolios there. Since January, the COO here, and based in Stockholm. Yes. Here is what I'm planning on talking about today. Many of these words have been mentioned already many times today. I will try to shed a bit of light on how we look at asset management, how we are really focusing on asset management, how we are building the structure and the organization in order to be able to really have the focus here. It's about finding efficiencies from a pan-Nordic scale.
It's about putting the standards for how a Citycon shopping center should be run and how it should look. It's also about finding the growth opportunities within our operations in, for example, specialty leasing. I want to share quite many examples of how we have started to change the tenant mix in our shopping centers, and also some larger conceptual changes, and examples of those. First, it all starts with the people. This is how we have structured the new COO organization. The whole idea was actually to, I'd say, densify the COO team from having 13 different reporting lines and now down to basically five different reporting lines. It was about making these clear functional leads on a group level. You see here, for example, we have one leasing director on a company level that is responsible for the full Nordics.
You have one person in charge of the center management, being responsible for the whole operations. At the same time as we created the structure of the COO team, one important thing that we wanted to change was to bring the accountability and the power also down in the shopping center. We did the change that we empowered the center managers. We made them fully P&L responsible. They are now in charge. They are accountable for their shopping center, of how it looks. They are the local team leads. The property managers are reporting to the center managers, and that means also that our commercial directors that have a portfolio to handle, they now have less reporting lines and can really focus on driving the value and on the asset management. Also, one point is that we changed the title from shopping center manager to center manager.
That's an important philosophical also change in our company. We created a centralized operations development team who is now fully focused on supporting all the OpEx, CapEx initiatives we're doing. They are in charge of procurement, sustainability, and security. The important note that was already mentioned, we now have a separate specialty leasing department. Previously, specialty leasing used to be below leasing. When specialty leasing is below leasing, it will not get the attention it needs. There will always be big deals that will take the focus away from the smaller deals of specialty leasing. If you want to be successful in specialty leasing, you need to run it like an own business, where you have a team running with ambitious goal, and that is what we had done. We have a separate specialty leasing team in place. I want to introduce my team.
Some of you've already met of this, but starting from the left, we have Sanna Yliniemi. Many of you remember her as the commercial director of Iso Omena cluster. She has been part of that success story. Now she is in charge of the operations development team. We have Jussi Vyyryläinen. You met him yesterday and on the tour. He's now in charge of leasing on the group level. He used to be first leasing director in Finland, and later on in Sweden, and now for the full group. Magnus Bergman, who's also on the tour, he's in charge of the operations of the center management. He has been with us for a long time, worked both as a commercial director but also as a development director, which is a very important point as we try to find this very close cooperation between development and operations.
We have Kathrine, who is now heading the specialty leasing department. She was previously the head of leasing in Norway and now running this business line. We have a new face. That's Peter Dimulkas, who is our marketing director. He started yesterday. He has a very long experience from working with strong brands. For example, Absolut Vodka, Coca-Cola. I think what will happen is that we will start looking completely different at marketing from now on. We will not look at marketing as the end product or a campaign at the end of something. We will start looking at marketing as part of the full customer journey, at looking already when you do concept changes, does it have the elements to make people excited and to touch people?
Kathrine and Peter are here, so when we have the coffee break, I really suggest that you take the time to discuss with them because I'm sure you will be inspired. A bit about operational excellence. This is a word we use a lot nowadays in Citycon. It's more than cost savings for us. It's not only about the cost, but of course the costs are there. It's about creating, first of all, harmonized processes, policies, and practices. How do we work? How does the Citycon shopping center look? How do we work on different things? Creating this logic that we work on in the same way in all our countries. It's about creating common standards on security and safety. It's about creating this platform to share knowledge between countries. We have over 40 shopping centers, with also the managed included.
That means that there is always a risk that people start doing things in their own way and with their own standards. That's why you need a really strong central team that puts in place the guidelines and make sure that everybody understands how we want to work and what is the Citycon standard. It's about centralizing procurement and finding efficiencies via that. We now have a fully dedicated team with Sanna in the lead, who is able to spend a lot of time renegotiating large contracts, making sure that we can get good fixed prices, making sure that we have a good relationship with our service providers, and also following them up to make sure that we get what we really pay for. We have a big scale, so we can centralize a lot of our procurement.
We all buy Christmas lights, we buy escalators, and filters. All of these, when we do budgeting, we follow up what is needed during the year, and we can make centralized purchases of those. As the last point, what we're doing within this area is that we are trying to prioritize operational and investment need. This was already discussed a bit. One of the things is that we have introduced weekly leasing committees and biweekly investment committees. Now all the suggestions and all the recommendations from the operations come to these central committees where we take all the knowledge we have in the company. We look at this deal, we analyze, we get feedback, we ask more questions to make sure that we are making exactly the right priorities and that we are making the right decisions.
Here we can help with, for example, the questions like how much do you value occupancy versus rental level? How much do you value this investment versus that investment? We are looking at this on a total level, and we want to, of course, allocate our money where it gets the best return. Also very important point is close cooperation with property development team. We have already started many discussions with Erik about how to intensify our cooperation. We need to break down all the silos that exist between the operations and development, because if you want to be successful in the future and in developing shopping centers and making them up to date, you need to have a very close cooperation because the demand usually comes from the operations, but the solutions might come from the development team.
You need constantly having a good dialogue in order to be able to develop our shopping centers in the right direction. A few words about our customer journey. This is, of course, where it all starts in asset management. It starts in digital, it ends in digital. You need to be present there. You need to be available for your customers. You need to give them the thought that, hey, I should go visit this center. I would like to highlight a few of these points. First of all, the atmosphere. I think that will become even more important and has become even more important. People want to come to your shopping center because they want to spend time. They don't only come there to transact. It might occur also, but what they want to do is that they want to enjoy themselves.
They want to be in an environment that feels good, that's connected to them, and where they can enjoy time with friends. Also the other point is the services and offering. It's more and more important that we have that kind of offering that our tenants really want in our shopping centers. I will give a bit of examples of those soon of how we are changing our tenant mix for the future customer. A bit about leasing. This was already mentioned, but leasing spreads have clearly improved. I would say two points. First one is that we have a better portfolio today. The quality of our portfolio is better. Secondly is that the market sentiment has improved a bit during the last 12 months, 24 months, and especially in Finland. Now you can see especially our Finnish leasing spread improving.
These are the total sales and footfall figures. We see that they're growing. We also see here, it's of course impacted by our development project, but it's also impacted by the quality of our portfolio. This creates an excellent platform for us when we are doing deals to base on. Sharing a bit also on the tenant mix, how it has evolved. You have two numbers here. On the left, you have the 2015 number. On the right, you have the H1 2019 figure. What you can see is that the share of fashion has gone down by five percentage points to 25%. You can see that services and offices has gone up by four percentage points to 14%. Cafes and restaurants have gone up one percentage points. That's not enough. We are targeting much higher numbers.
Within a couple of years, we should be 13+, for example. I think that should be doable. At the moment in Sweden, we are at 13.5%. What is dragging us is Norway and Estonia. Here we have a lot of potential of adding within this area. Fashion and accessories also, we are at 25%. If you look at the numbers we have in Finland and Sweden, we are at 20%. That's closer to where we want to be. Services and offices also naturally, we would like to see increasing further. A few important deals that we have signed lately. You will see three important grocery deals. Two of those you saw today. That was the Lidl and ICA here in Kista. You see a few very important municipal deals. There is several F&B, both full areas we are developing in terms of F&B.
You see interesting fresh concepts like Søstrene Grene, JD Sports, and Deichmann that we have signed. Many very interesting things coming online in our shopping centers. Here are also a few examples of brands that are active in the market that are expanding to the Nordics within the Nordic countries. You see, for example, the Japanese Muji. You see the Danish companies, Normal and Søstrene Grene, being very active. LPP brands, the Polish LPP brands, the Baltika Group, even Ivo Nikkolo and Monton are expanding. You see a few Finnish F&B brands also expanding now in different markets, Jungle Juice Bar and Fafa's. Many brands are active in the market at the moment. A bit about specialty leasing. As mentioned, we now have the dedicated team in place for this area. Today, we're at EUR 6 million annually. 50% comes from common area leasing, that includes also pop-ups.
Half of it comes from media sales. We want to do all of this ourselves. We want to generate the full income, with one exception. That's when we do media sales and the technology for the screens. That's when you want to partner to invest in this rapidly changing technology. Otherwise, we want to do it ourselves. We have the 170 million footfall already in place. That's the best foundation you can have for growing your specialty leasing. When you look at the numbers here, you can see that Finland is ahead in our portfolio. We think there's a lot of potential still in Finland. In Sweden and Norway, we have even more potential to grow this business. What we are doing at the moment, in practice, is that we are mapping out all of our shopping centers and creating new GLA in the common areas.
Making sure that we have the correct pricing in place, so that we hit all the lows and highs in terms of pricing, that we have the best occupancy we can have for this new GLA at all times. Why is specialty leasing a focus area for us? Once more, we are capitalizing on the 170 million visitors that we have per year. We are creating new GLA. I think there's many more aspects to this. It's about testing new tenants. It's about creating excitement, something new in the shopping center. It's a very low risk also try for both the tenant and for us. There's many positives with good specialty leasing. However, what needs to be also pointed out is how important the visual merchandising is in specialty leasing. It is very important that it looks good.
It needs to bring something to the shopping center. The partnerships we can do with marketing and with brands, how we can really get this into being something cool. A few examples. One I think you walked past today is the Cinnabon pop-up in Kista. We brought this international brand as one of the first location in the Nordics. It's an excellent location, right in the middle of the hall in Kista. We get triple almost the rent that we get for our average food and beverage units in Kista. They're doing really well. Let's see. Hopefully, they might become also a permanent tenant for us. What they are doing is that they're providing a great experience for the customers in our shopping center. One example from Norway, from Trondheim. There we had, for example, Nespresso as a pop-up store.
They tried it out. They saw that there is demand. We signed a permanent lease with them. A few examples also of a bit larger concept changes that we have done in our shopping centers. This one you've seen today. It's in Kista Galleria, how we have developed both the grocery offering and the food and beverage offering. We are now increasing the share of groceries from 6% to 9% out of GLA, given now these two brand-new groceries. They are doing excellent. Lidl has been one of the best-selling stores in Sweden. I know that also ICA, that opened a couple of weeks ago, has by far hit their own estimations. This was in the end about solving a location where we used to have a big department store.
This forms this whole new area in the Galleria where we can start building around this and really monetizing on the new drive that we have in this part of the Galleria. Second initiative we're working on in Kista, as you saw, is the F&B and the food court. We are introducing the M.E.E.T concept, Meet, Eat, Enjoy Together. The same concept that we launched in Iso Omena a few years back, which has been a real success. It's about creating a more cozy environment for the customers. This is very important. We serve there 6,000 meals a day. It's very important that we deliver an atmosphere for our customers.
Also, in addition to these two things, we are also working on a light refurbishment in the Galleria where we are upgrading lighting and upgrading some of the walls, to make it look fresh. From Columbus, we are opening a third grocery there, Lidl. After this Lidl has opened, we have the largest grocery offering in the whole of Eastern Helsinki. The share of the GLA will be above 55%. Fashion is basically nonexistent in this center anymore and should be. It's a 20,000 sq m shopping center, and it's fully based on the daily needs, that's what it should be. Following this, we are still upgrading a bit of the F&B offer there, it's a very well-functioning shopping center. It's a growing catchment area.
It was mentioned that we have sold off some resi building rights next to it, high quality, high resi towers in this area. We have today 6.6 million visitors in the shopping center, but the area is still growing. This is a great opportunity for this neighborhood. An example from Trio that was also mentioned. We have signed a municipal service square, 1,000 sq m. They will open now in the fall. They're working on it. We know this concept from before, from Iso Omena. I think there were two factors that impacted why the city of Lahti decided to open this service square with us. One is that we have the best location in town, and second is that they could see how successful the Iso Omena concept has been, how good feedback they received from the customers and residents in the area.
Now they are collecting many of the city services, everything from family and social services, into this place. Now it's 1,000 sq m. We are already discussing with them on bigger premises. As was mentioned, is that this is on the first floor. This is actually an area that we have been struggling with vacancy, and this is the perfect anchor for that level in the shopping center, and we are planning on building further on this when we start developing and revitalizing, I would say is the right word, for Trio. This is a perfect kick to get that because we already see a completely different leasing situation since this deal was official. One example from Estonia, Tallinn, Kristiine. There also, we have been doing a bigger refurbishment project with two main goals. First one was to add on a lot of food and beverage offering.
We are increasing from 5% to 12%. Now we are at the final stages of this refurbishment. We are upgrading the main entrance, which is towards the tramline. In conjunction with that, we are now creating a 1,000 sq m food and beverage area. Also last year, we opened over 3,000 sq m O'Learys, with also cinema in the shopping center. Also, as you see on the pictures, we've done a light refurbishment to make sure that our shopping center is attractive also in the future. This is from Norway, Kolbotn Torg in the Oslo area. Last year, we opened two new F&B tenants, an Espresso House, 200 sq m Espresso House in a very central location, and a 600 sq m O'Learys. Since then, we have seen footfall increase by 23%. There has been a huge spillover effect also on sales of the neighboring tenants.
For example, the neighboring tenant to Espresso House saw a 12% increase in their sales in an area that is not connected to F&B. You see immediately that there's more footfall in this area. In overall, we would say that we see a completely different commercial appeal for the shopping center, and we can continue to develop the F&B quality in the shopping center. A few words about our sustainability. Sustainability have for a long time been a central element of Citycon strategy and our operations. You know we have received a lot of recognitions during the years for our work within sustainability. We have a sustainability strategy today that is formed based on three pillars or cornerstones. The first one being carbon neutral. Our ambitious goal is to be fully carbon neutral by 2030.
That means that we are removing as much carbon dioxide from the atmosphere as we are putting into it. We are on our way to meet this target but it's an ambitious target. Second pillar is accessible. As said, we are always connected to public transportation, and our strategy is to make sure that we in all ways promote green ways of coming to our shopping centers. May it be car charging stations or parking for bicycles, and also working very actively with municipalities and with local stakeholders for future options within public transportation. Taking an active role in those discussions within that area. The third pillar is being convenient and safe. We want our tenants and our customers to feel safe and secure in our shopping centers.
We have a measure where we say that we want the tenant satisfaction in this area of safety, security, and hospitality to be above 90%, and that's our goal. Here are a few of the key figures that shows some good progress within this area. We have reduced greenhouse gas intensity by 47%. As said, we want to be fully carbon neutral by 2030. That would mean that this number would go down to zero. I would like to point out the green in use certifications. We have been very active in certifying our properties. We today have 84% of our properties are certified. We are aiming at 100% in a couple of years. What we get from these certifications is that we learn our properties, we know what investments we should do, where the best returns can be for different kind of investments.
Also one additional point is that many lenders look quite closely at sustainability measures today, and there may be options in the future also to get better lending rates because you have these certifications in place. A few examples about our community activities in our shopping centers. We hosted over 700 local events in our shopping centers last year. One example is the cooperation we have with the Finnish NGO, Nuorten Palvelu, so youth service. We are cooperating with them. They are training our security guards to meet youngsters. All of our largest shopping centers in Finland have trained youngster security guards. What we have seen is that this has calmed down our shopping centers a lot. The youngsters feel like they have a friend also within the shopping center, and that we are welcoming them.
There has been cases we have been able to take action when we've seen that some youngster is going in the wrong direction. This is a very nice cooperation with this NGO, and right now we are doing a big anti-bullying campaign together with them. In the middle, one example from Högdalen. We are working together with the Stockholm City and together with the local NGO that is specialized in supporting long-term unemployed, and also combine it to different sustainability measures. We have rented out for them in the basement of Högdalen, an area where they can grow vegetables, mainly salads, and then they sell these products. There are some local restaurants that buy these products, and you also, as a consumer, can go and buy their products. This has been ongoing for several years and is still successful.
Last year, we opened a very cool library in Stovner in Oslo. They were previously a bit outside of the shopping center. Since moving in, they have increased their amount of visitors by 300%. Now they have 350,000 annual visitors in this library. This is a very good anchor also here on the higher floors, that really brings a community feeling and a very big footfall driver. Within the area of safety and security, we have been really active with certifying our assets. We have been actually one of the drivers of these standards on European level. We have now seven of our largest shopping centers certified with this International Safe Shopping Center certification. What we learn here is this is kind of a way for us to learn more about our shopping centers again.
This is a very holistic view of looking at the shopping center, this certificate. We learn a lot about our operations and about operational excellence when we do this. We know where to put our focus, and what changes to do when we have these certifications in place. A final example is an energy investment we've done in Buskerud. That's a bit outside of Oslo. We have done an investment in upgrading ventilation in the shopping center. We have put in new lighting. We have started to use CO2 as refrigerant in the cooling machines instead of oil. What that has meant is, I think actually we are one of the first in the world to do this, so this is quite new. Also we have started to recover heat from the cooling systems in our grocery stores.
All of this together has meant that we have reduced our energy consumption by 50% within eight years. The investment payback time for this investment was actually less than four years. We are working on many similar projects right now. We also receive state subsidies, so we make sure that we also utilize them to maximize the return that we get from these investments. That was everything from me.
Thank you very much.
Thank you very much, Henrica. Now it's time for some questions before the break. If we start with Anssi.
Thank you. Anssi Kiviniemi from SEB. two questions from my side. First of all, it seems that a lot is happening in the background, and you have done a lot already. Could you kind of put things into a little bit more concrete form? Where should these actions lead in terms of figures, and how should we see the actions really coming through in the P&L balance sheet and operations generally?
Maybe also Eero and Scott can answer, but I think for my part, I do not want to comment on any specific numbers. I know there is a lot of potential in specialty leasing, for example, as a growth. We know that the number we have today can increase by a certain multiple. Also when it comes to efficiencies, I wouldn't like to say a specific number. We know that there are efficiencies that we can get. There is improvement in the quality of the shopping centers that we can have. I wouldn't like to give any specific numbers at this point.
Maybe talk about
Maybe we can say a few concrete examples from this year. If we start from the OpEx savings, for example. The headcount this year has been reduced to 239, 11 FTE is less this year, and the full year impact of this then will be visible more next year. That would be like a concrete example from OpEx savings.
The CapEx number was significant.
If you look at the CapEx, this year it's down 18%. What Scott commented previously was that the aim is to control the strict CapEx control going forward as well. Specialty leasing, what Henrica said, where we see the immediate opportunity is in Sweden and Norway, for example. If we lift that part of the business first, that gives you a certain indication where it can go. Eero has something to add.
I'm equally impressed as you are about the things happening in operations. It's really great. I will be reviewing some of the numbers in my presentation, so we will have a look at that a bit later.
You can reserve the right to ask this question again if you don't get your question answered when Eero.
Okay, I will definitely do that.
Yes.
The second question. 2030 carbon neutral, target. How much will it cost and how much investments will you need to make in order to reach that?
I would say that we are not doing extra investment just to reach that goal as such. What we are doing is that, for example, we have now renewable energy sources in our shopping centers. We have in Iso Omena, we have solar panels. In Jakobsberg we have geothermal heating. We are also introducing that in Lippulaiva. It's about when we do make investments, we make investments that also are positive for this figure. It's no separate amount that we would only put into reaching this goal, because nowadays you have so much technology in place that when you, for example, upgrade ventilation, it doesn't need to be an extra cost. It's about how you just make sure that you utilize the best technology. In OpEx, it's also a lot about how you steer your property management.
It's a lot about how educated our people is in reading into the numbers and making actions based on that. Many of these energy investments, we can say they're energy investment, but I would also call them maintenance investments because they are basic things that you need to upgrade in your shopping center.
I mean, I think Henrica's exactly right. We're not proactively going out and ripping out all of the.
Scott, take the mic.
Oh, I'm sorry.
Yeah.
Henrica's exactly right. We're not proactively ripping out all of the HVAC systems in our shopping center, lighting in our shopping centers to replace it. It's as we need to make these new investments, the new investments we're making, we identify them as opportunities to then improve the sustainability.
I would suggest to you that we are doing it only if there is an identifiable return attached to it.
We're not doing it I don't want to say we're not being good corporate citizens, but we're only doing it selfishly if there's a return on that investment. If it's something that costs us more and we don't get a return for it, then we have to decide why would we do that.
Some cases we may say we're not. There's not some pipeline of capital investment that's identified to change all of this stuff out.
Great. Thank you.
Any further questions? Rob, please go ahead.
Hey, very interested on-
Is the mic on? Hello?
Okay. Just very interested on the CapEx point. Just if you could give me the detail on the spend down 18% on the six months, because when we walked around the centers and throughout your presentation, you're showing me quite a few store reconfigurations.
More F&B. I'm thinking in my head, CapEx is going to be going up here.
What is that number actually referring to?
That is the total CapEx spend, including maintenance CapEx and TI, so that is the total number. We have been doing before many changes in our shopping centers and in many cases also many larger projects at the same time. Now we are doing maybe smaller but more of those projects, and more kind of accurate, touching some points. Also, when we do these changes in the shopping center, I forgot to mention, when you look at, for example, the municipal service square, it's mainly the municipality that is investing in that premises. It's not always us. The municipality are investing a lot. If you look at the groceries also, the groceries are investing a lot in those. It's not only our share, but it's also the tenants who are spending a lot in these premises.
Okay.
The other thing I would add to that, if you look at the portfolio today, we have these better assets, you have to make less CapEx investment than if you have a struggling asset. It's not only the things that Henrica's described to you, it's also the fact that we have a better quality portfolio today.
When you do a new deal with a tenant, you are negotiating from a position of strength, and therefore the tenant investment is going to be greater than the investment would have been if it had been a lesser quality shopping center. I don't know if that makes sense.
Good. Ari had a question here in the right-hand side.
Yes, Ari from Danske. Briefly, you are planning to give more power to the shopping center, excuse me, the shopping word, I tried to skip it, but to the center management. Basically, what is really changing? What are the key KPIs that you're measuring on them? Do you have some incentive programs also planned as a kind of addition?
Well, they are now fully P&L responsible. Earlier, the center manager was, together with the leasing, responsible for the income side. Now they are also responsible for the expense side. We have a quite good, I think, bonus program in place where they are measured based on how they meet the budget, for example, in their own shopping center. It's also related a lot to mentality and to ownership and accountability of their shopping center. That's a philosophical change we have done within the company. Now they're fully responsible. Earlier, they were responsible only for half, so to say, because they weren't really in charge of the daily operational side and the expense side.
Okay.
Further questions. Please go ahead here.
Yes. Nordea. Regarding your tenant mix, the food and beverage is around 9% currently, you said that 13% or above would be achievable. That implies a 50% increase.
For example, working around in seems like quite a big number if you would increase it 50%. Would it rise also if you sold off smaller centers, does it automatically increase that way also?
What are the drivers that you will be able to grow that number?
That also, of course, helps. If you would look at, for example, the number in Kista, which is today 20%, and you would compare to Liljeholmen, which we also visited, which was 10%. You can see there's an obvious increase potential in, for example, Liljeholmstorget. You also now, of course, if you would have Lippulaiva come online, you also have a bigger percentage there. It's true that the big animals kind of affect this number more. I would say also the number in Norway is currently around, I think, 6%. It's at a very low level, and also the number in Estonia is at a very low level. I think especially in Kristiine and Rocca al Mare, we have a potential to increase those numbers. Kristiine, a full effect was not included in these numbers, for example.
Okay, thank you.
A few more questions before we go on a break. Maybe we take two more questions. Please go ahead.
Yes. This is Jesse from Inderes. Just one question. Do you think it's possible to get the special leasing in Sweden and Norway to Finland's level of 3% NRI, and how long do you think this will take?
I think it's possible. How long? We are working now on a, I would say, five-year strategy internally. That is how we look at this. How long it will take? I wouldn't like to promise anything. Yes, it's possible to get it on the same level. Absolutely.
Can I add to that?
Yes.
You're not going to like what I say, Kathrine's not gonna like it. I think it's not likely, it's inevitable, the 3% in Finland is a level that should be increased. Norway and Sweden should get to that Finland number very quickly, and more broadly, it should be a higher number across the entire portfolio, including Finland.
One more question if anyone has. All right. We thank Henrica for an excellent presentation, and we go on a short break, and we continue in 19 minutes at 3:00 P.M. Swedish time for those following the webcast. Thank you.
Thank you.
All right. Thank you. I hope you had a nice break, and welcome back also those following live webcast. During the next 90 minutes or so, we'll have presentation from our CFO and Executive Vice President, Eero Sihvonen, on the solid financial base, followed by Erik Lennhammar, then we'll have a short wrap-up and Q&A for all of you. As previously, there's a possibility to ask questions after Eero's and Erik's presentation. Eero, please go ahead.
Thank you, Mikko. Welcome everybody to Stockholm, my current hometown, and particularly welcome to Kista. I will be touching a few sub-areas regarding the financial part of the presentation today. I will discuss first of all the disposal markets. I want to leave you with a few messages. Here the main message about disposals is that the Nordic property transaction market is a serious market, there are volumes, there is demand. Regarding the stable business model, we have already gone through the main basics of our business model. I will try to go a little bit deeper into why also I believe that it's a stable business model, why the CapEx requirements have not increased, what we have done about that, how do the numbers generally stack up, as well as highlight a little bit the main cost reduction programs that we have in place.
Actually, out of my presentation, which the part that I think is the most exciting is the refinancing, and we are now currently at a very interesting stage in the global financial markets. I have been following the debt markets for clearly 40 years, and I think that we are now currently at the most borrower-friendly situation of debt financial markets that I have ever encountered. This is something that probably has not yet filtered into the pricing models of maybe you guys, maybe property appraisers, and maybe some of the other market participants. This is something I would like to also participate in hammering in. A few words about our financial targets. What are the main financial targets and what do we think about those going forward? As mentioned, the Nordic disposal market, it functions well. It's a serious market.
Combined, the four Nordic markets is like 16% of the European property transaction markets. It's bigger than France, for example. It's a little bit smaller than Germany or a little bit smaller than U.K., but still, it's a good size, decent market where transactions happen, and particularly in Finland and Sweden, something which is particular, a lot of the stock actually trades, so meaning that this is a liquid market. It has certain implications, and it has implications particularly that we have been able to sell properties, non-core properties, and we expect to be able to do so also in the future. I will be a little bit going through our recent performance in that respect, what we have been doing, what we have been selling, and what maybe we expect to be able to or willing to sell.
Here you have noticed that we have a little different tone. We don't want to commit into a particular amount. We are not distressed sellers. We sell when there are opportunities where we feel that it is appropriate, and we are quite adamant on the book value on NAV. Going six, seven years back on average, actually, we have achieved the book value for the disposals that we have actually done, and we expect to be able to do that in the future as well. It means in practice that we don't want to commit into any particular amount in EUR or any particular timetable. We will do it in a manner and shape and form which will be in the interest of our shareholders and in the interest of our company in general.
Coming back to the Nordic transaction market, it has been approximately a EUR 40 billion market on an annual basis. Of course, Sweden is a majority, the biggest part of that. Also Finland is a quite serious market as mentioned, and also Norway. We don't know, of course, exactly where 2019 will end up, but everything would seem to point out that as markets go, 2019 will most likely be pretty much the same as 2018. At least this is what our advisors think. We are not the best experts of this market as such. The retail last year was 16%. Also the general market is big, but a quite substantial amount of the transactions has been within retail. This also means that the retail component of the property transaction market is quite liquid. Transactions do happen.
About the property valuation yields, for those who have followed our reporting for a little bit longer, naturally do remember that we have two full valuations a year and all of our properties are externally fully appraised. Current appraiser is CBRE. They have been appraising our properties for two years now. There has been a little bit of bifurcation in the yields, meaning that the yields of the lesser quality assets maybe have increased a notch. Apart from that, the valuations have been actually quite stable, and there has been very little to no movement in the better quality asset yield requirements. Also here, if you, in this same picture, would plot the development of interest rates, you would see that actually the spread between financing costs and property yields is at a historical high.
Actually, I have never seen this high spread between financing cost and property yields. At least always before, what has happened when such a situation has emerged, always in the history, property values have actually started to increase, not to go down. Of course, we don't know if that will happen now, but I think that this is a very seriously supportive factor to the property values. This is something that I don't think that the markets maybe have fully factored into the models yet. Of course, I fully understand that there will be this timing lag, and not everybody is sure that this is to stay. Maybe this is a temporary situation, which, by the way, I don't believe it is, but give it a little more time, and I think that the level of financing costs should actually be very supportive to the property values.
I mentioned already that we have been able to transact quite nicely and sell non-core properties. Scott already mentioned, and Henrica as well, that we sold in Columbus, Helsinki, the land plots. These land plot sales will be further intensifying Columbus Shopping Center going forward, even though we don't own them. There will be resi towers built. Likewise, we got out of Lapland. We had a shopping center in Rovaniemi, actually a very good shopping center. Rovaniemi, despite it is in Lapland, it is a university city, and that was a good shopping center, but a little bit not like our kind of a property. Duo, Arabia in Eastern Helsinki and Duo in a suburb of Hervanta in Tampere. They were also very nice, a little bit smaller assets, and probably better in somebody else's portfolio than ours.
These are just examples of our most recent property disposal transactions. There has been, and is a solid demand for assets like this, and in all cases, necessity-based, some grocery, and even the buyer has some development opportunities and plans and what have you. Nothing wrong with the properties themselves, and we have a few of those potentially left. About stable business model, rather than going very deep into the numbers, and particularly rather than going very deep into the Q2 numbers, which start to be already like old news, I will a little bit describe and highlight the business in general and the business model in general.
One benefit that a long history within the company gives me is the fact that I have seen the occupancy rates for a quite long period, and I've been with the company close to 14 years now, and the lowest occupancy rate I have seen has been like 95%, and the highest has been a little bit shy of 97%. Amazingly stable occupancy level. That, of course, gives you a certain base when forecasting the performance, analyzing the performance. Right now we are more or less middle of this range, like 95.6%. Most of the rent, if you a little bit analyze what kind of a rent we are collecting, most of the rent is fixed market rent. A little bit later, I will give a few ideas around that.
Additionally, the business model entails that tenants do pay their cost of living, if you like, service charges covering those running costs like water, electricity, cleaning, marketing, so on and so forth. This is a pretty nice business model to have. Like I said at another event, I think that managing shopping centers is still a pretty nice business to be in. Also, very importantly, a clear majority, nearly all of our rents are fully indexed. That means that you already automatically have this close to 2% step up in your annual rents. This gives you a good starting point in managing your rental portfolio and analyzing your performance. A very high percentage of the rents actually comes from the capital, the fixed part. Then this gives you also some stability, but actually brings also with it an element of upside.
Like mentioned, we will be driving the specialty leasing income, and also there might be something that you can do, and most probably there is, you can do about the parking income. This business kind of a structure of the rents means that we have underlying stability, but still a lot of upside that we are working. Like you noticed, a lot is happening within the business, within the operational organization. The fact that the specialty leasing income we see increased opportunities naturally has to do also with international and peer comparisons. Clear growth in net rental income. I just want to highlight that because it was not always so that we saw growth. At least for the first six months, net rental income was positive.
I will a little bit later show you how much of that came from the like-for-like sources and what were the other sources of the growth. Actually, naturally, 2018 was below 2017 because back in late 2017, we sold a quite large portfolio of approximately EUR 200 million of non-core properties late 2017. That was the reason behind 2018 dip. Quite meaningful is that we are now back on black when it comes to like-for-like rental income development. Like Henrica said, there is maybe underlying a slightly more positive tone in the leasing markets. Naturally, also our portfolio is now better because some of the weaker properties have been sold. Iso Omena is now fully into the like-for-like portfolio, like-for-like pool as well. These probably are the main reasons behind this positive like-for-like development within 2019.
Like-for-like is this small positive black bar, and the red bar is actually the total development of rents in Sweden and Denmark is up by 10%, mainly because of the Mölndal, which Mölndal Galleria came on board last year. Another topic that we are discussing quite a lot, and we receive questions from the investors and analysts a lot is credit losses. What about them and credit loss provisions? In this chart, we are discussing both. When we say credit losses, that also includes credit loss provisions and actually means that this is the more conservative kind of a thing than pure credit losses. If tenants are late, you try to start reserving for eventual credit losses by provisioning for such losses.
Anyway, our credit losses plus provisions are internationally at very competitive, I would say low level, like 1% of gross rental income still approximately. Yes, historically, some years they have been less than that, but mostly lately, 70 basis points to 1% point out of gross rental income. We don't see a huge negative development happening. I think that now this has been fairly stable. If anything, our processes are now more conservative. Provisioning has been more conservative, mainly because of the changes in IFRS. IFRS requires us, even if Kesko is a tenant, for example, we need to reserve a little bit of that as a technical calculation, as a credit provision. Anyway, yes, they have slightly increased, but still are internationally and by comparing with anybody, any other landlords, any other peers, they are at very low level.
Comparing, I think that there was a question about the occupancy cost ratios. Yes, our occupancy cost ratio has been approximately 9% and it can be grown. Why is it below some of the other guys? I think that, again, the main reason is that we have more groceries, and groceries have a lesser OCR by definition. Their margins are less, and they take a bigger space. Still, that doesn't mean that they are bad tenants as such, rather to the contrary. Anyway, having said this probably can be somewhat improved. Again, there, we don't want to give any exact timetables or exact assumptions how much that could be. Like Henrica mentioned, there are a lot of things going on. Actually, a myriad of things going on, and improvement opportunities are found pretty much and worked on pretty constantly.
We have already had a quite long journey of cost reductions. I think, by the way, that this EPRA cost ratio is a very good tool to follow, because companies have different ways of categorizing costs between admin, SG&A and OpEx, but this EPRA cost ratio captures them all. If you want to follow one ratio within cost, I would advise you to follow EPRA cost ratio. We have had a very nice journey until now, and we expect this will continue. Here we are already within the better quartile, I would say, when comparing to our peers, which is not always easy in the Nordics. Salaries are high and costs of running certain things are higher than in some other places. With hard work and good solutions, I think that we have been there, and we expect to be able to improve further.
Particularly, these high costs in the Nordics has an impact on the SG&A. In 2018, we had certain exceptional costs and restructuring costs as we are having a little bit this year as well. Despite that, we actually reduced our SG&A base by more than EUR 1 million. If we take into account or if we deduct one of restructuring costs, actually, we were able to reduce SG&A by 12% compared to last year, which I think is a great achievement. Again, there we stack like we are more or less bang in the middle when comparing with our other European retail peers, and we have room to improve. The right-hand bar actually is the admin expenses compared to net rental income. In European retail real estate, there has been this rule of thumb that SG&A is approximately 12% of net rental income.
If it's more, it's bad, if it's less, it's good. We actually are more or less there and are expecting to reduce that still going forward. This interesting topic of CapEx. I think that the popular belief is that retail real estate companies will need to increase CapEx because tenants are more demanding, because of the whatever retail sort of a trends and because nowadays concepts are changing faster. If we look at the green part of our CapEx chart going four years behind, actually, that has not increased. What we feel is that there are variations between years, and it depends a lot what do you happen to have.
If there is, for example, a very large H&M or very large something else during that year or a few of them or several of them, then you tend to have a little bit higher, but there is no directional increase, not at least any major increase. Like Henrica mentioned, tenants, quite often they are paying for their own TI, if not fully, at least partially. This reflects our part, and this our part has not increased. Whereas we have substantially tightened the CapEx process, and this is something that Scott has brought with him, and we have instituted within the company a much more tight capital allocation rules. I think that if you look already at what we have been able to achieve in the first six months of 2019, I think it's fair to say that CapEx, if anything, is less, not more.
We don't see that CapEx requirements would be going through the roof or anything like that. Rather that if managed properly, CapEx requirements are quite manageable. Of course, what helps us is that we have improved the quality of our portfolio. We have sold many properties that are quite capital-intensive, and even those properties which are maybe a little bit less capital-intensive, we have already invested money. We have done so already during previous years. We are not in a situation where we would have a lot of deferred CapEx or anything like that, rather to the contrary. This is a good situation to be in. We will come to my favorite topic, which is refinancing situation. I'm really excited about what's happening right now in the debt financing markets.
Before going into that, let me share with you some of our main financing targets. We continue to be mostly fixed. We have one bond, which is maturing June 2020. It is EUR 290 million. That turned short-term, and because it's short-term, it's not counted as fixed rate. Therefore, in Q2, we had 83% compared to Q1, like 95% of fixed, although we did not do any new swaps or anything like that. Our current investment credit ratings are BBB- by S&P and Baa3 by Moody's. We are investment grade. Our financing is mainly unsecured, and that gives us a lot of firepower. That gives us a lot of flexibility due to the fact that most of our assets are unencumbered. We actually have only one bank loan in Norway, approximately EUR 100 million, which is secured.
Kista, which is a joint venture investment with CPP. That's a securitized loan as well. All of our revolving credit lines are fully unutilized, so we haven't drawn anything out of our EUR 500 million revolver, and neither from the other revolvers that we have. Everything we have is totally undrawn, meaning that the liquidity situation of the company is, I would say, as good as it can be. We have a lower average maturity of the debt portfolio. It was over five last year, but now since the end of last year, we haven't paid or refinanced anything and raised anything, so that therefore, we are approximately half a year short average debt maturity compared to the end of last year. The loan-to-value currently is, as can be seen here, i.e., 48.9%. I will come back to that a little bit later.
Here you can see the development of our main KPIs. As can be seen, the interest cover ratio is 4 times, which compares to our ICR loan covenant of 1.8. This is also one function of the low interest rates environment. We have ample headroom under all of our covenants. We have had a quite nice journey already when it comes to the weighted average interest cost. Like I said, I believe that there are opportunities to refinance the company, at least partially, at quite interesting rates. I will also describe that in a while in a bit more detail. When it comes to debt capital, we have at our disposal multiple sources. We still believe in the old-fashioned relationship banking, although most of our funding comes from the bond markets.
We always knew that there will be a rainy day, or there can be rainy days, and the bond markets are not functioning always. You need to have plan B, maybe even a plan C or plan D. This is the reason why we believe in relationship banking. Commercial papers is an interesting tool. We currently have about EUR 135 million outstanding in Finland, Sweden, and Norway. It's a very flexible tool. You pay 10 basis points or something like that, and it is part of your liquidity management. If you have a liquidity from disposal, for example, if you put it to your bank, your bank will charge you for money unless you have a deal with them. What you can do with that cash, of course, if you have commercial papers, you can flexibly repay commercial papers.
Which, by the way, is not so easy if you have mainly fixed-rate bonds. You can buy back bonds, but it's a very complicated exercise, and it takes some time, and you may have to go via a quite sort of a formal process of bond buyback. The Nordic real estate companies are mostly raising their debt financing from bond markets, but it was really us who started it. This is at least how we want to describe the situation, or at least how we believe it. We issued our first bond back in 2012.
At that time, most of our financing was still coming from the bank sources. We still keep the relationships open, and it's possible that we will raise more bank debt in the future. Right now, like I mentioned, interest rates are at very interesting levels for the borrowers. On the other hand, the bond spreads have been elevated. Now what we see is that elevated bond spreads are coming in. This is a very interesting development. I don't know how fast it happens and to which extent, but I think that both trends are now in our favor, i.e., interest rates going down and bond spreads narrowing. A further interesting development is that there are now other funding sources which are potentially available for companies. You have seen that many real estate companies have issued hybrid capital, for example.
This is probably nothing for us, nothing at least for the time being, but it's quite interesting that other tools are available. For example, Danish bond markets is a very interesting alternative. They have started, at least to a certain extent, to accept Swedish properties as security. This is an interesting development. Specialist funding institutions are there, quite active. Like Henrica mentioned, our sustainability exercises make us eligible for those fundings. For example, Lippulaiva is a near zero emission building, and if you have a near zero emission building, that becomes eligible for certain specialist funding institutions. If everything works out, you can potentially discuss quite interesting terms. This is our debt maturity profile. The nearest bond, EUR 135 million. The first bar is actually the commercial paper, but the first maturing bond, like said, is June 2020, and that is our most expensive bond as well.
This is something that even we cannot miss. Basically, this is something that when we refinance it, we will save financing costs, clearly. The next maturing bond is early 2021, and this is a NOK bond, this NOK 129 million. These are the near-term maturities, but also potentially we can work around some of the other bonds that we have maturing. When it comes to our debt financing policy, we are always financed in local currency. In Norway, we are financed in NOK, and in Sweden, in SEK. We haven't issued any SEK bonds yet, but in Norway we have issued three bonds. In Sweden, we have achieved a foreign exchange exposure via cross-currency swaps. You don't necessarily have to issue the currency of a bond itself.
This is the list of our bonds that we do have on the markets, and the next maturity will be this originally EUR 500 million, which is mentioned last. Currently only EUR 290 million is outstanding because back in 2018, we bought back the remaining EUR 300 million. Yesterday I had a look at EUR swap rates, now EUR swap rates are negative until 15 years. I haven't seen such a situation ever before. Even SEK swaps were negative yesterday until seven years. Norway is a little bit of an exception. Norwegian interest rates are still positive, they are about 2 percentage points higher than a EUR or SEK. In general, this is a very interesting situation from the angle of borrowers, I think that this could quite fundamentally change the cost picture of any real estate companies.
I think that this will lead into quite a lot of refinancings, and could be that the pendulum has now swing in the valuation too far right or too far left, meaning that I think that this should certainly be a positive catalyst in real estate company and retail real estate company valuation. Certainly worth following up, and certainly worth doing something also in practice. The financial targets. I already promised that I will say something about them. We have only a handful of them, and first has to do with the like-for-like net rental income. There we are on the right track. We have been able to produce positive numbers, and now we have to make sure that the positive numbers get bigger. The first step is we can also tick the first box, i.e., the numbers are positive. Loan-to-value of 48.9%.
We are committed to our loan-to-value target, actually don't think that it is a major drama if we are a little bit over. Like I said, this is a very stable business model, 48.9% is still a solid, reputable loan-to-value. We intend to be net sellers of properties, which will eventually reduce the gap or close the gap. As said, we don't want to commit into any particular timetable or any particular amount in this respect, it will totally depend on the markets, which themselves are working pretty well as I described. Dividend equity return-wise, last year we distributed 80%, approximately 81% to be exact, of the earnings. Like mentioned, we have been selling EUR 700 million of assets since 2015. There was one bulge a year in 2017 when we sold one portfolio.
Apart from that, pretty close to EUR 100 million a year. Already now for the first six months, we sold more or less that amount that we sold last year total. We have very concrete discussions. We have written offers. We have cases where we are discussing transactions, but again, we are not committing into any particular amount of timeline. This is a very stable business model also in terms of EPS going back several years and even in terms of cash flow generation. 2018, many of you remember that we had a bond buyback, and the bond buyback cost like EUR 34 million bond buyback costs, including the special or the earlier than normally paid interest, and the buyback cost was about EUR 20 million. That is the main reason why the cash flow itself last year was a little bit lower.
After buying back that bond, we have going forward a clearly better cash flow, so everything will be paid back in that sense. On the left-hand side, you will see our dividend yield, and right now, I yesterday calculated that it's probably right now about 6.6%, which is a nice yield and has been stable between 6.3% and 7% for the last four years, i.e., a quite interesting yield in these times of negative interest rates. This is, in my opinion, a serious investment consideration. Again, this was pretty much all of me. In terms of conclusions, again the Nordic disposal markets are working very well. We have a stable business model, which makes it quite predictable. The refinancing situation actually is also, I would say, better than we expected, and our financial targets are in place. This is pretty much my part.
Back to Mikko.
Many thanks, Eero. Now we have a few minutes for your questions before we hand over to Erik. Please, Simen have a question.
Simen from DNB. In terms of your LTV, it's not near your target yet. The value gains are limited in your portfolio. You have a high dividend payout ratios. You have communicated you have some sales on agenda, but what steps can we expect for you to become below 45 in terms of your LTV?
Do you, Scott, want to start? You look like you want to say something.
I'm not the CFO. I guess I'll take the question. Listen, there's a variety of levers available to us, right? We have some assets, as Eero mentioned, that we are in discussions on for disposal. If we were to execute those would impact that. Absent that, there are other levers that we're looking at. We are not looking at touching the dividend. That's not one of the levers we're considering at this point. There are other options available to us.
We are not looking into raising equity.
Yes. Thank you. Be very clear about that. That's why I don't answer CFO questions.
Yeah. I think that there has been too much maybe attention on this LTV. I think that the LTV that we have is a fully functional and a good, respectable LTV. Of course, yes, we would like it to be a little bit lower, and we will get there. As said, we don't want to give a message that we are a distressed seller, rather to the contrary.
How do you feel the credit rating agencies look at this supposedly if you.
Very-
exceed 50%?
Yeah. S&P is here today. I think that this is a question to me. I think that the Rating agencies have tightened their requirements, their grids, and they are more demanding than they used to be. This has an impact, but like I said, we will not increase the LTV and we are not getting into 50%. This is a hypothetical question from that angle.
We've already taken the hit.
Yeah, we have taken the hit. We have been downgraded already. I think that interestingly, sir, there were some opinions from within the company that this is a relief because now we are downgraded. We were first on a negative watch and then always had to discuss about that. Then when we were downgraded, then we knew that this is now it. It has happened now already. Now we are comfortably in the middle of, in our opinion, closer to the high end of this rating. I don't think that we are anywhere near anything else downgrade-wise.
You don't think this will impact the bonds you potentially going to raise next year?
Well, of course it has an impact. Yes. Bonds are priced based on many factors, but primarily based on credit rating. Certainly it has an impact. What I was saying is that now also the credit spreads seem to be coming down and seem to be narrowing because there's so much demand and there's so much capital seeking yielding targets. This mitigates a little bit the fact that our credit rating is a notch lower for S&P, a notch lower than it used to be.
Just in my final question, in terms of divesting assets, you have sold a lot of stuff in Finland. Since you entered Norway, you haven't sold that much in Norway. Is it an assumption fair to make that it's Norway now being considered assets being sold?
Well, we have also sold a number of assets in Norway. Yes, it's true that lately, mostly in Finland. The Finnish markets have been particularly responsive and there has been Finnish property funds and for example, we sold assets to NREP. There has been property funds operating in Finland who have been very successful in raising capital, and this is probably the reason why Finnish market has been more active. Do you want to add something on Norway?
You did.
Yeah.
Maybe we can take one more question before we let Erik. At the end, we can still take further questions if you have any, but Eero was very comprehensive and thorough.
Thank you.
Thank you very much, Eero. We welcome Erik on stage to talk about our development pipeline.
Yes.
Erik, go ahead.
Thank you very much. Hello, everyone. I have the pleasure of having the last presentation. Just to keep you alive and focused, I will have a movie in my presentation, so just stay tuned and you will see. It's always fun to show some movies. I was asked to make short comments about who I am. I've been here now for three weeks, and my professional background is that I started working in 1998 at NCC as a construction company. Quite quickly started focusing on retail assets and retail developments, was participating in Gallerian downtown in Stockholm, where we were yesterday, actually. Sturegallerian was responsible for the Zara establishment in the Nordic region at that time. In 2006, I moved on to Steen & Strøm, which is a Norwegian property company, also management company as Citycon. Was starting as a project manager for Sollentuna Centrum here in Stockholm.
Moving on quite quickly, taking responsibility for all the investments that we had ongoing, the ongoing developments. Did that for a couple of years, then finally I was development director for the Swedish region. In 2014, I moved on to an investment management company called Nuveen Real Estate. When I started, it was called TH Real Estate. My responsibility there was to take care of the asset management up here in the Nordics. We represented approximately five mandate funds that made investments up here, both in Finland and Sweden. We looked on a lot of the transactions also in Denmark and Norway, but, as you know, the investment market is quite hard. The main thing that we did during my years there was actually buying 50% of Kamppi Shopping Centers, which I know many of you knows about. It was a JV together with Allianz.
That was good. Now, 3 weeks ago, I'm at Citycon. As a development person, and I think as you heard, Scott talked about the strategy going from pure retail manager, asset owner, moving in a little bit more to mixed use, together with the input from Henrica about all the CapExes that we are actually doing in our existing assets. It's just a really good opportunity for a development person as myself to join at this stage in this company. I'm really glad to be here. A little bit, I will not have as long presentations because I don't have that many facts just yet. Just to summarize where we are in the development and just give some examples, what we actually are working with. I will start to talk a little bit about the investment criteria that we have.
Moving on to ongoing development projects, finally showing you some examples of developments that we currently are looking into and opportunities that we see in the future. You have seen this slide already. A lot of my slides you actually saw in Scott's presentation, so it's a little bit repetition. Bear with me. The criteria that we have, of course, is to see that we have a potential when it comes to the income side. We need to have the opportunity to put in CapEx and value-add potentials. We want to be in the strong markets on the top 2 cities in the region. Of course, we want, Scott mentioned it, the public transportation is really important. That's only shown in Iso Omena. When it comes to the tenant mix, we want to be anchored by grocery.
Preferably, we would like to have more than one grocery store, maybe three. When we move on then to the development, when we look on that, we need to have 150 basis points above the market yield to make it profitable and to deliver the right returns. When we look into the pre-leasing side, we need to have at least 60% pre-let before we start the development. To check where we are, just a good example on two examples. I can't take the credit for these projects, unfortunately, because I haven't been there, but it's really great examples of what Citycon can actually have delivered to the market. Start with Iso Omena, who more or less tick all the boxes when it comes to our criteria. The market is really strong, located in Espoo. We have superb connection with the public transportation when it comes to metro.
We have the grocery store, 4 grocery stores accounting for 25% of the GLA. The non-retail income is 37%. We have the food cinema. We have a public service square, a big library. It's a really good example for us to also use in our future developments when we have discussions with municipalities around the Nordic, to just get them to understand what we're talking about. Because it's not always so easy to get local politicians up in Bergen to understand when we say that we want to develop this asset to a more mixed-use asset. We want to add this, we want to add that, and blah, blah. They don't quite understand. To get them to come and visit us and show them the actual assets that we have, makes it much easier for us. I think it's huge.
It's a really great thing to do, and also good for them to take with them home and say, "This is what they mean, actually." I think we can use Iso Omena as a great example in our future development and going to a more mixed-use asset owner. As I said, I can't take so much credit of this construction and this development, but Iso Omena was actually won the best shopping center awards by, is it called FCS? No. In 2018. Then it was the Nordic Council of Shopping Centers, then they won the competition on the Nordic level in 2019, then actually also on the European competition. It's a huge success for Iso Omena, which is really fun and good. Another example, Mölndal Galleria.
A great example of a market where we want to be really close to the transportation hub, with the tram and buses leading into Gothenburg. Really strong market. A lot of planned residentials in the market area, also a lot of offices that NCC is creating. When we look into the tenant mix, it is also the food and beverage, and the grocery stores comprise about approximately one-third of the rental income. This project is actually, just to give you some perspective when we talk about changing and going to more mixed-use developer and when you develop these kind of projects, is that I worked with Mölndal quite closely in 2009, 2010 when I was at Steen & Strøm.
We actually had the agreement with the municipality in Mölndal to create a center, and we had huge plans together with Wingårdhs Architects about residentials and shopping centers and stuff like that. Unfortunately, we couldn't agree with the municipality about a high-rise building that they wanted to have. It was like 25 floors. That never happened. We actually terminated that agreement in 2011. Now it's done, and it's opened up in September 2018. That's the process we talk about when we work with municipalities and zonings plans and trying to create the kind of developments that we look into. When we talk about the potential developments that we have in the future, we need to prioritize and see where are we, Sorry. Where are we in the processes with the city? The city is much easier. What do we need to go through?
When can we have a construction start, and so on. It's a long process, and that's why we have a lot of opportunities in our portfolio. It will take time, and we need to just build up the organization now to be able to take care of all the opportunities that we have. Mikko.
Could be fate, just a blink of a moment, and it's gone. The smallest piece that we need when we're broken or lost. The moment that just passed us by. When we go blind about what makes us sigh. Could be fate, just a blink of a moment, and it's gone. We keep falling down. Until we start to tear. We can still be strong. Wipe out all your tears. When words die. When we're falling apart, hold your hand where my heart is. Get me high. When we're apart all the time, just show me where home is. When words die. When we're apart all the time, just show me where home is.
That was Mölndal . Go there if you haven't been there. Okay, going to the future. As Scott has said, we will focus on a mixed-use development in the future. We will look in to see how we can add different asset classes to our existing assets. It could be retail, offices, hotels, residentials, of course. Just to make the play stronger. Just to make the shopping center stronger, and to create a diversified income stream. To be able to do that, I started three weeks ago, and my main priority is, of course, to look into developments that we have. Which order can we do it? How much cash do we need? It's a continuous discussion between me and Scott, but then also about the organization that we have and how we'll build the development department and what kind of expertise we actually need.
The people working on the development department today is professionals in retail. I've been working with retail developments all my professional life. We need to look in to see what kind of expertise and experience we need to add to us to build a team that actually can deliver on this project. It might be we need to build up a team that's not so huge department, but we need to have the exact right competencies, because then we can build up underneath with consultants and experts helping out in all the questions that we'll face in the future. Currently, we're mapping the residentials. This is also a slide that was hijacked from Scott. I will not go so far into this. We have a small portion of residentials today, mainly in Kista, the Swedish number. The potential is huge.
We look into it can be residentials, it can be other stuff. This is actually residential that we have under zoning. It's not just the idea. It's actually residential opportunities that we work with municipalities, and it will be a portfolio in coming years. The potential is even bigger. The discussion is how can we take care of this? As Scott was into also, we can sell them as building rights still, but we want to develop them ourself also into rentals or to condos, maybe in JVs to learn. We need to do it slowly, and we need to know what to do. It's not that we all of a sudden are going to be resi developers because we don't have that knowledge today. In the future, we will be there. Hurry a little bit slowly, I would recommend.
The ongoing projects that we actually have today is Lippulaiva in Espoo. If you compare this to our criteria, it's almost tick all the boxes even here. It's double the size of the shopping center that was standing here before. It was turned down and will be replaced by this. It consists of approximately 44,000 sq m. We have the opportunity here, and we will have the building rights to build eight residential towers on top of the center, which are 30,000 sq m. We're currently looking into the strategy, how we will treat those building rights. About 80 stores. Today, we have pre-let 60%. In the end of the year, we think we will reach approximately 70%. The grocery comprise 34% and the food and beverage, 13%. We are approximately where we want to be. Currently, we are under construction. It's groundworks ongoing.
Foundation and steel structure is going up, we are in the final stage of negotiating with the main contractor. We believe we can have a contract signed in the coming month. Opening spring 2022 will be a really great shopping center. If you not have been on this site, I recommend you just go to look on our smaller center that's on the parking now, Lippulaiva. Me as a retail person and developer person think that is a good replacement during the construction time for the big one. If you look in a little bit to the future, we decided to present four projects. You have seen two of them today, so I will not stay too long on those presentation. Just to start with Liljeholmen, as you know, you saw it today, it's an excellent center.
As Scott mentioned, we do the investment and the shift to the mixed-use manager on the assets that we think is really good. It's not to save the retail that we have there, it's just to do it better, to do it bigger, and we have the opportunity to put in things. We're looking into, as you saw, building over the rails from the metro, connecting the square with the big green areas and the lake, Trekanten. This is close cooperation with the municipality, and all these projects is really close cooperation with the municipality and the city. We can't just come to the city and say, "We want to do this and this and this." Then they don't have that huge interest of helping us. This is a good example of how we work together with the municipality.
They have a boring area which they need to do something with. Instead of having the metro line going open up, we can work with them, looking over that, giving us the opportunity to create offices and residentials, making the place much greater than it is today. It's a park, which was a demand from the municipality over here. That needs to be created, just to make the landscape much more attractive than it is today. This is a good example of cooperation and a project how we want to work.
Actually, doing it the right way against the city will just lead us the positive effect of showing that we are the right kind of developer, because we can use this cooperation and show them that this is what we made here in Kista, for example, where we were a little bit behind in the time frames, let's say. If we work here in the right way, we will have much easier working with the same people in the same city in Kista and create what we want to build here in Kista, which is the next project. As Henrica told you about, we have ongoing projects inside of Kista with the food court. You saw it also today, and the common areas, making Kista much more commercial. The atmosphere should be more commercial.
Here is also, as Henrica said, one part of our job will be also to make a service to the commercial side and work together with the commercial side how we do all the investment that we're supposed to do, because it's quite expensive to refurbish the food court, for example. How do we do that when it comes to development? I have the experts on my team, and Henrica has the commercial expertise on her team. We need to combine each other and each other's team just to make the best possible way for the company, yeah, to do the best. We move on to Trekanten. It's a shopping center in the municipality of Asker, west of Oslo. Also excellent location, really strong market. It's one of the wealthiest market in Norway. Here, what we're doing, Trekanten is a part of the city center in Asker.
Really close to the transportation hub, close to the culture house, which we doesn't own. We have a shopping center in Trekanten. What we want to do in Trekanten is just to make it a little bit more visible. We need to raise up the shopping center from, it's a little bit hidden today, make the inside/outside more blurry, so it's more welcoming when you're coming to that city center to be able to walk into the center, and just to cover the streets. At the same time as we do that, we of course want to have some building rights and build offices on top of the existing house. We can look into hotel or residentials. It's also a great example of cooperation that we have with the municipality. We're not quite there yet.
I believe that we will have a great plan during next year that I hope that the municipality can approve and that we can continue the work. Finally, the last project is Oasen, also in Norway, up in Bergen. It's located outside of Bergen in a place called Fyllingsdalen. This is actually not a part of the city center in Fyllingsdalen because it's a quite small place, but it's more or less the city center of Fyllingsdalen. Actually, the municipality calls Oasen for the heart of Fyllingsdalen, which is really positive for me as a developer, because then I immediately understand that we have a common interest developing the heart of Fyllingsdalen. A really strong market, growing a lot. It will be expected growth in population by 50% to 2040.
The main thing here is the municipality is working with the new rail tram line coming from Bergen through the mountain up here. You can see the tram line over here. It comes, stay right outside our center. This is the vision picture of the center that it could look like in the future. It's not existing, Oasen. It's a little bit older. Yeah. In connection with the tram line, when it comes up to the square, the municipality also working on a bus terminal and a culture house. We have our shopping center. Here we have a discussion with the municipality. How can we incorporate the culture house and the library in our asset? What can we make together with the municipality to get the mixed use asset that we want, because we don't want to add so much retail here.
We can make a much better shopping center as it is, and include all the services and everything else that we think just generate a better asset, both for Fyllingsdalen and for the people living there, and for us. At that same time, we're looking into how much residential can we add on top of this shopping center. This is a discussion that we have ongoing with the municipality also. I think Oasen is the perfect example where we can use Iso Omena to show them what we actually are talking about and what we actually are meaning when we say mixed use. That was it. Thank you very much.
All right. Thank you, Erik. Any development related questions for Erik? Go ahead. We can start with Anssi.
Thank you. Anssi from SEB. One question. We have heard from the CEO and CFO that the CapEx going forward rules are quite strict. We're seeing a lot of development, a pipeline, and just looking at your criteria on how you're going to execute them. They seem like a really good return projects, if they go on. How should we think about the development CapEx for the next five years? Could you comment that a little bit?
You go.
We sound a bit like a broken record. I apologize. We are in the process of mapping out. I get that you guys want, and we should provide you the information so you could build your models. We're in the process right now of mapping out what we think, which of these development opportunities will come online when. We already know Lippulaiva. We know the ones that are already in process, and we can give you that information. As far as these other development opportunities, we're mapping that out now and we need to allocate pricing along with that. We owe ourselves, and we owe you some information on the pipeline. What we've tried to do today is to give you at least a view of directionally where we're trying to take the company. We don't have all the answers yet.
I don't have all of the details and the information. We wanted to at least share with you what we're trying to do with the company, both operationally as well as where we're taking the company. It's a long-winded way of saying, I don't have those answers for you yet. We can give you Lippulaiva. We can give you the ones that are already in process. We can't give you the full picture yet. I would suggest, give us a couple of months under his belt, and we'll be able to map this out and provide you more information. This is very similar to what we said to you at the beginning of the year as it relates to some of the asset management initiatives as well. We need time to tell you how we think this is going to play out.
We're in the process of mapping all of this out.
Maybe just to add to what Scott just said. Like Erik said, these are long-term projects. Even if we are working on them, does not mean that we would immediately start spending money, even if we would be committing, which we are not committed into any of them yet, apart from Lippulaiva, of course. It will take a lot of time to work out everything and work out what are the financial returns and then to make our selections and what have you. In this selection process, we will be very structured and we will be very much looking into how much money we can spend and what is the yield.
The other piece of this is how are we going to execute it? We talked about the fact that we have three different ways that we can try to realize these opportunities. One of which is to sell the rights. Anything we decide to do that with, those aren't CapEx required. That's immediate revenue for us. Columbus being the example that we just executed this year. We need to make that decision about how we're executing each of these, and then we'll give you the pipeline. What I don't want to do is I have a mantra inside our shop that we've been preaching since I got here in January, which is, let's underpromise and overdeliver.
We don't want to throw some targets out there just to try to appease you. I'd rather you be frustrated with me right now that I can't give you the exact numbers. Know when I give you those numbers that they're going to be very well thought out, and we're going to deliver those numbers.
Okay, thanks.
Svante, you had a question.
Yes. Svante Kokko, Nordea. Here in your development criteria, you mentioned that profitability should be 150 basis points above the required yield. To me, that indicates you would get a 25%-30% development gain on your projects. Can you elaborate a bit on that logic?
I don't follow you on that calculation. What do you mean, 20, 25?
Yeah. If you model 150 basis points yield on cost above the valuation yield. If the valuation yield is somewhere around 5%, 5.5%, for example, then.
Yeah
the development gain should probably be 25, 30%.
Would you add on that, please?
No. The development yield should be 7%.
I don't think that it would be a 25% sort of gain. We are rather thinking about development risk. I think that this is a quite customary way of looking into development projects. Let's assume that we have a shopping center which has a 5% valuation yield currently. We would have several kind of rules and requirements for any development project. One of them would be that this development project to start, it would need to yield at least 6.5% because that's 150 basis points. I think this is quite normal.
It's the return on the investment. Yeah, it's quite normal. Its return on investment is 7.5% on the project, the market yield needs to be 5%, whatever, 6%. It's 150 points above the market yield. It's quite common practice, I would say.
Kind of a rule of thumb. Of course, it would be much more sophisticated than this, the real analysis.
Any further questions? We can Oh, Robbie, you have one. Do we get a mic?
You can have mine.
Perhaps just a CFO question then.
I know you have it, Robbie.
Just thinking on the margins we've discussed, I just want to understand your thinking behind capital allocation. Citycon trading at a discount, you've talked about the margins you can make from development. I see your view on leverage, can you tell me how you think about this in-house? Leverage, share buybacks, developments, the priority.
Yeah. On the other hand, development historically has been our best spent euros because we know the properties, and we know what we can do and what we can achieve rather than buying properties. I think that that would be our preferred way of seeking for growth. We would know that this is where there is already demand, where we have customers, where we have tenant demands, and so on and so forth. Over bought properties, this would be our preferred way to grow. Again, I would reiterate that we are going to be net sellers. We want to reduce the gearing going forward. I don't want to give you a message that the LTV is a non-issue. It is an issue, but it's not like a huge top priority that we are considering every day.
We still think that contrary to some other people, we think that 48% is a fully respectable and well-functioning LTV, considering where the financing costs are, where they are headed, and particularly considering how stable our business model is. Like I said, we will rather reduce the gearing than increase it.
I think Shall we take the mics off?
I just want to add, I don't want anybody to take the wrong message away here. We are focused on it, and we talk about it. We are looking at the levers available to us. I don't lose sleep over it in terms of operating the business, but I recognize that it is something we need to address. We're focused on it. We will deal with it.
Any further questions for any of the management members? Scott will say a few concluding remarks, but we still have time should you have any questions. Good. Some concluding remarks, Scott.
Okay, thank you guys for hanging in there with us. I know it was a long day. Appreciate your patience. Appreciate your time today. If I could repeat what I said earlier, I think our story's a good one. We have a really strong business model. I think we have made changes in the team, to begin to really focus on the asset management of these assets and to really squeeze more juice out of these things as they are. I think Henrica and her team are really doing that. I know they're focused on it every day. I see it in the office. I think there is longer-term opportunity in the development space, in the densification of these assets, because we own really good real estate.
I know we don't have all the answers in terms of the numbers yet and what it means, but we're working on it. I will promise you that, we're working on it. I want to let you know that I'm really proud of the team that we have assembled. You met some of them today. I will tell you, this new team is pretty amazing. I'm very honored to be working alongside them. We own some amazing assets. We got really good people, and we got really good assets, and that's a recipe for success, I think. Anyway, thank you again for your time. Appreciate it. If you have questions, feel free to call Mikko. I know he doesn't want me to say this, but feel free to call me. Thanks again.