Earnings Call: Q2 2021

Jul 16, 2021

Thank you very much. Welcome everyone to this presentation of PanDoc's 2nd quarter for 2021. As you already heard, I'm Anders Berg, Head of IR at Pandox. And I'm here together with Leon Ho, our CFO and Acting CEO. And in line with our tradition through this pandemic, we have an external guest with us also today, Robin Rosman, Managing Director International at STR. And as you know, Robin represents a leading independent research firm focused on the hotel market, and he will share STR's view on the hotel market for us, and we are very happy to have him on board for this presentation. The report presentation is divided into 3 parts. First of all, Lia and myself will present a business update with financial highlights for the Q2, followed by the external update from Robin, and then we wrap everything up with a Q and A session. Next page, please. And with that, I hand over to Julia. Thank you. As you all probably know by now, on May 30, our CEO, Anders Knysen, tragically passed The way after short period of illness. The loss of Anders is immeasurable on many levels and has Had a big heart and a genuine interest in making the people around him grow. He was fearless, honest and a great source of inspiration for everyone he met. So we lost an exceptional leader, a close colleague and above all, a dear friend. I have had the privilege of working with I've been for over 14 years as CFO of pandox and makes me and it makes the SORO around us extra there. I respect for the assignment as acting CEO, and I'm very motivated to continue to develop this strong company. Together with a close knit organization with competent entrepreneurial employees and a clear game plan, I feel optimism for the future. Next page, please, the page with our portfolio. Pandex has a well diversified hotel property portfolio. In total, we have 156 hotel properties with more than 35,000 rooms in 15 countries and 90 cities and with a property market value close to SEK 61,000,000,000. Pandex is divided into 2 business segments, property management and operating activities. In property management, we lease hotels to Strong and well known operators under long revenue based agreements. This segment makes up for 84% of our property market value. In operating activities, we operate the hotels ourselves under different operating models. Operating activities makes up for 16% of the property and market value. Next page, please. Pandex has one of the strongest networks of brands and partners in the hotel industry. As you can see in the picture, we work together with Several well known operators, for example, Scandic in the Nordics, Jourzhen in the UK and Leonardo Hotels in Germany. We also have long relationship with strong international brands such as Hilton, Kram Plaza and Radisson Group. In our operating activities segment, We also have some independent brands created by Pandox, for example, Hotel Berlin Berlin, which is Pandox's largest hotel with over 700 rooms. Next page, please. Hotel demand increased in all markets in the Q2, but the development in April and May remained weak due to extensive restrictions remaining in place and delayed reopening in many markets. However, Supported by strong recovery in the U. K. And improvement in other markets, particularly in June, Pandex saw positive growth in revenue and earnings in both business segments. Our relations with Gurdabank are strong, and we have had close to SEK 4,400,000,000 Swiss kroner in cash and unutilized credit facilities at the end of the quarter. At the same time, our loan to value was a strong 49.7%. Economic recovery in Pandex market is currently strong. This, combined with an increased vaccination rate and eased restrictions, is creating good underlying growth potential in hotel markets. Progress in Europe and other large hotel markets such as the U. S. Indicates that there is a considerable pent up demand for travel, which is quickly converted into occupancy once restrictions are reduced and travels becomes easier. Pandox is in an attractive position as around 50% of all our rooms are in regional and domestic cities, and therefore, we have high exposure to domestic demand, which will lead the recovery in the hotel market. Currently, contractual minimum rents or fixed rents are expected to make up the majority of our total revenue. And to sum up this slide, just a quick look at the numbers for the Q2. Total net operating income increased by 32%, Like for like, property management decreased with 11%. Return on equity measured by annualized growth in AirPra MRV was approximately minus 5%. Next page, please. Positive growth was reported in the Q2 in all of our countries where Pandex has operations, partly explained by the increased demand due to Easter Strictions and partly a weak comparison quarter in 2020. For the first time since the start of the pandemic, Pandoc reports a positive earnings growth. This includes government support of around SEK 100,000,000 of which SEK 98,000,000 in operating activities. Currently, contractual minimum rent and fixed rent remains our main source of income. And as you know, this income covers All Sandoz's operating costs, including our interest payments. We report modest unrealized value changes in the property management in the quarter, and I'll come back to this later in the presentation. End of quarter, trade account receivables related to new payment terms amounted to SEK640,000,000 which is an increase compared to the previous quarter, which was SEK 566,000,000 Next page, please. During the quarter, we have finalized the renovation of 827, it's spelled with a small h, in Central Copenhagen. All rooms in the lobby area and other common areas have been decorated with a focus of Danish design for the 50s 60s. Total investment for pandox was approximately SEK 35,000,000. Next page, please. Another beautiful hotel, Scandi Kalluvio. Another large project that was finalized during the quarter is the expansion of Scandiklulu. The expansion includes a new tile building with 9 floors and 119 new rooms. In addition, we have renovated the conference rooms, restaurant, gym and hotel rooms in existing hotel building. Total investment was approximately SEK 150,000,000 Next page, please. Pandex revenue base is diversified with revenue from different operational models and agreement types. Currently, minimum rents at fixed Strength in property management are our main source of revenue. This amounts to almost SEK 2,000,000,000 per year or slightly less than SEK 500,000,000 per quarter. In the Q2, revenue based rents amounted to some SEK 51,000,000 and revenue from operating activities amounted to SEK 146,000,000. Next page, please. Our different contract structures and operation models give different revenue exposure, Measured in number of rooms, where we have full and immediate impact from market recovery is 35%, out of which 16 percentage points comes from our own operations and 19% from revenue based leases without any minimum guarantee rent. The remaining 65%, there is a gradual impact from the market recovery. Main part is our revenue based leases with minimum guarantee rent. Next page, please. In the second quarter, Pandox valued their The portfolio according to the same math and the model we have used since the IPO in 2015. Value changes In the Q2, we're modestly negative, mostly explained by reduced cash flow due to COVID-nineteen. Yields largely unchanged due still to inconclusive transaction evidence. Approximately 70% of the properties have been externally valued during the last 12 months. External valuations exhibit a large disbursements between within and between markets. External valuations are on average some 6% below our internal valuations. The valuations Differently small in the Nordics and larger outside of the Nordics. The 22 external valuations, We've done 21 in Nordics and 1 in Switzerland carried out in the Q2. Our total approximately 2% above Pandex internal valuations in the Q2. In the quarter, total unrealized and realized changes in value amounted a negative NOK 109,000,000 of which negative NOK 105,000,000 for investment properties and remaining NOK 4,000,000 for operating properties. And again, please note that according to IFRS, unrealized changes in value for operating properties are only reported for information purposes and is not included in the EPRA NAV. End of period average valuation yield for investment properties, 5.46% and operating profit is 6.38%. Next page, please. On this slide, we can see the value changes of our portfolio per quarter as well as the accumulated value change from the start of the pandemic, Q1 2020. For the total portfolio, that cumulated negative value change over this period amounts to some 5.1%. And of course, there's a high correlation between restrictions and demand in the hotel market. When restrictions go down, demand goes up and vice versa. Development in the markets ahead of Europe in the recovery such as USA and China are very encouraging. When restrictions go down, demand go up driven by domestic travelers, which benefit hotels with domestic and regional demand exposure, just like Pandox portfolio. Furthermore, transaction relevant for Pandox indicate resilient valuations. Banks are accommodating, liquidity is strong and transactions relevant to Pandox are supporting our property valuation. So the jury is still out how the world will look after the pandemic, of course. But so far, demand is clearly linked to restrictions, not change of behavior. We have an established and proven valuation process. We know our hotel properties better than anyone else. We have individual plans for each business plans for each and every property, and we have a detailed understanding of the specific revenue drivers for each asset. And yes, the pandemic has negative short term effect on the cash flows in our hotel properties, but we do not expect long term yields to be affected in the same way. Next page, please. And then let's take a look at our EPRA NAV and financial position. End of period, EPRA NAV per share amounted to SEK 169. This corresponds to a good decrease of Approximately minus 5% on an annualized basis. Loan to value 49.7 percent. Cash, cash equivalents and long term unutilized credit facilities amounted to approximately SEK 4,400,000,000 which is all stable and strong picture since many, many quarters we had through this pandemic. Credit facilities maturing in less than 1 year amounts approximately EUR 5,800,000,000 of which approximately EUR 3,800,000,000 will Sure, in December 2021. We have a positive close dialogue with our lenders on new financing and refinancing as well as an adjustment of terms and covenants, if needed, in existing credit agreements with consolidation of COVID-nineteen. And during the Q2, we also completed refinancing of approximately SEK 900,000,000. Lenders have given waivers in individual credit agreements where needed. A positive thing is that we also saw increased appetite for our commercial paper program under which we have SEK647,000,000 outstanding at the end of the second quarter. Next page, please. And I will now hand over to Anders Berg, who will talk about our path of getting back to full performance. Thank you, Leah. That's a challenging task, but I will try to do my best. As you know, This is the 6th consecutive quarter now affected by the COVID-nineteen pandemic. And from the beginning, we have organized our work around 3 focus areas: respond, restart, reinvent. And to be honest, most of our work has been and is centered around respond and restart. And that is keeping the ship in good order and being able to capitalize on the market recovery. Next page, please. We expect the hotel market recovery to take place in phases where different segments are gradually building up demand in the hotel market. Over the course of the pandemic, our markets have moved largely between Phase 1 and 4 depending on the level of restrictions in each market. The key driver in early phases is domestic demand, particularly the domestic leisure with some support from domestic business. Next page, please. The Q2, as Lia said earlier, saw a weak start as restrictions were still tough in most of Panjok's markets. High vaccination rates and lower infection rates led to gradual easing of restrictions and gradual improvements in demand in all of PAMDOG's markets as the quarter progressed. Particularly in the U. K, there was an immediate and tangible uplift in hotel demand after the reopening on 17th May. As before, the main demand driver was domestic leisure, but domestic business also contributed with transient demand and demand for smaller meetings. International demand, however, was still low. Next page, please. The following slide summarizes basically the ebb and flow of demand throughout the pandemic in Nordic Regional, Germany, U. K. Regional and the individual cities, Stockholm and London. The chart on the left is based on monthly occupancy data and the chart on the right is based on weekly data. I start with Nordic Regional just to illustrate a pattern which is largely the same in all markets, and I'm describing the chart to the left. After a strong start in January February 2020, harsh restrictions were imposed and hotel demand fell sharply to its lowest level ever in April 2020. In May 2020, some restrictions were eased and countries and cities opened up and hotel demand returned. Demand then increased gradually in June, July, August September 2020, followed by a plateau in September. In the Nordics, which had a relatively light restriction situation, the summer was particularly strong. From October, when restrictions were reimposed again, hotel demand decreased quickly, and it remained weak all through the Q4 2020 and the first 2021. The occupancy rate for Nordic region in the Q2 2021 was approximately 40%, with additional improvements in the 1st weeks of July. With the support of a strong economic recovery and rapid increase in vaccination rates, the upturn we are currently seeing is hopefully I underline hopefully more robust than last year. Next page, please. It is a general trend across our markets that larger cities with a high dependence on international demand have seen a slower development in regional cities. Stockholm is no exception. However, during the Q2, occupancy improved steadily and there have been further improvements in the 1st week of July. Next page, please. Occupancy in Germany has largely followed the pattern I described earlier. However, restrictions in Germany have generally been tougher than in many other countries, which is reflected in the lower comparable absolute occupancy numbers. Starting from 15% in April this year. Estimated occupancy in June was approximately 30% for the total German market. And also here, the recovery has continued in July. Next Page, please. UK regional was the practice spot in the Q2. Occupancy rose immediately after the reopening 17th May and reaching approximately 65% in June. The trend has remained largely intact in the 1st 2 weeks in July. And U. K. Illustrates well the direct correlation between restrictions and demand as well as the pent up demand for travel and experiences. Next page, please. London is, as you know, one of the world's largest and most international cities, and it has been suffering from closed offices, corporate travel restrictions in general and, of course, low international demand. However, starting in February 2021, occupancy has been increasing now for 5 consecutive months. And supported by the Euro 2020 event, July also got off to a good start. Next page, please. Clearly, we see the same pattern everywhere. Restrictions in demand are negatively correlated. But when you're allowed to travel, leisure demand picks up immediately, followed by domestic business demand, particularly for small and midsized companies. Next page, please. Talking about companies, one open question is what will happen with business travel. We, earlier in this month, did a survey of corporate clients in Pandoc's operator activities, which indicate a cautious transition to business travel in September October. Key considerations for companies are infection rates, vaccination rates and restrictions. It appears that many companies will revise their travel policies during the summer or early autumn. We note that there is a strong economic recovery in most countries and corporate profitability is high, which is positive for the corporate travel outlook in general. An indicative conclusion from our talks is that fewer business trips could well be balanced by longer space and therefore more hotel nights while you travel. Next page, please. Looking at markets ahead of Europe and the recovery, particularly the U. S. A, trends continue to be encouraging. Leisure demand is strong and business travel is picking up. In the final week of June, occupancy in the United states was approximately 70%, which is impressive considering that bigger meetings and events are still only at 50% of their 2019 levels. Large corporations still have travel restrictions in place and international travel is generally very low. Next page, please. As you can see from the chart, the recovery in the U. S. Has been strong with June estimated being the 6th consecutive month of improving occupancy. Next page, please. So to summarize, We currently see most of PanDoc's markets being in various stages of Phase 3. From a relative perspective, the UK is the strongest market and Germany the weakest. However, all markets are showing improving occupancy. The USA and China are further ahead with early signs of increasing international demand and increasing demand for larger meetings. Next page, please. And now, Lia, over to you again. Thank you, Anders. We see promising underlying growth conditions. We have solid economic recovery and increased vaccination rates. There's a pent up demand for travel and demand picks up immediately after restrictions are eased. Domestic leisure demand continues to be the strongest driver short term. However, we hope to see improving domestic business demand from September and onwards. Main uncertainty is the delta variant and reimposed restrictions. Next page, please. And now I would like hand I'd like to hand over to our guest speaker, Robin Rosman, for Telenomarket Update. And again, as Anders And please remember that this is a good but independent research separate from PanDoc. So please go ahead, Robin. Thank you so much, Leah, and thank you, Anders. Very good to be with you all this morning. So I'll take over and sort of moving on to Slide 29. Really start with just Reflecting on where we're at, there's obviously a lot of data that we'll go through here that has been used by PANDOK's in the presentation already. And I'll try and focus on the key points that haven't already been Talked about. And then move on to the outlook and finish with some conclusions. So Next page on to Page 31. And I just wanted to Say my own personal word on Anders, a man who really was so special in terms of the way he lead at PanDoc's the industry, but also the way that he made you as an individual feel Whenever you had the chance to meet him because it's very rare that you come across somebody that makes you more self confident about yourself. And Anders was one of those people. And I think What we said earlier, Balje, that he had a genuine interest in helping people to grow themselves is so true. So Thank you, Anders. And thank you to the Pandox team for continuing this great work. So on to Page 32, there is no doubt that this year has been pretty tough. Certainly, the weather over here in the U. K. Hasn't been anywhere near as sunny as it was last year. But the good news is that The outlook is certainly much better now. Moving on to Slide 33. Even though in Europe, it was a pretty tough year, what we saw is that elsewhere in the world, there's still these good Examples of recovery and certainly China continuing to recover North America and the U. S. Referred to earlier having some good recovery Middle East, strong recovery Australia and Oceania, strong recovery. Throughout our presentation, we talk about Two different types of occupancy. There's the standard occupancy, which is the occupancy of open hotels. But then we also do for completeness show What occupancy would be if you added back all of those temporary closed hotels, so that's total room inventory occupancy. And you can see for the markets on Slide 33, that there isn't really much of a difference. Certainly, in North America, the vast majority of hotels having reopened. However, when you go into Slide 34, 2 things you can see. Number 1, and a lot of these other regions and the rest World in Africa, Central South America and of course in Europe, occupancy is much lower at around 30% and Europe and even lower when you add back those temporary closures down to just about 20%. More on that in a bit though. But coming back to the U. S. On Slide 35, Really, it's interesting. A year ago at this time, we were looking at China as the example of The strongest recovery and the strongest benchmark of what recovery could look like. But the U. S. Has certainly overtaken that now because of its More robust vaccine program, so less subject to having to lock down for outbreaks like It has been the case in China in the last couple of months. And I think a more resilient consumer base willing to travel Despite any perceived risks that there may still be around COVID. And so we have seen in the U. S. Some remarkable recovery in recent weeks. Demand indexed to 20.19 levels is now trending at well over 90%. In fact, in recent weeks, it's been 95% of 2019 levels, which is quite remarkable given There really is still not that much recovery in business yet. So this is a lot of leisure driven demand. That being said, you can see how strong it is coming back. What's not on the slide, but I'll add to it is that from an average rate perspective, ADR, Nominal ADR is now back to the same level it was in 2019. So Rates are back in the U. S. And on a real basis, it's only so adjusting for inflation, it's only 5% below 2019 levels. And then when you look at the breakdown of hotels in the U. S, nearly half of all hotels have RevPAR that is at or above Their previous peak RevPAR on a 28 day rolling average. So more than half of hotels are already trading at above their pre pandemic levels. Now this is more regional markets, more leisure hotels. And if you look at those larger urban hotels, they are Still behind, but they are recovering. So really strong sums from the U. S, which is encouraging to see, particularly going on to Slide 36, Because in Europe, obviously, it has been a lot tougher throughout the year, although we have seen some recovery starting to come through towards the end of June in a similar way to what we saw as things were easing out of lockdowns last year at this time, in some cases a bit stronger like in the Nordics and in some cases a bit weaker like in Germany where the lockdowns have had lasted further than they did in 2020. But looking at some benchmarks of stronger performance in Europe, if you go to Slide 37, you can see very clearly that the U. K, Turkey and Russia all having much stronger performance than at an occupancy level than Europe as a whole. For different reasons, Russia and Turkey had lower cases and we're reopening until the delta variant has come along and caused some challenges there. But certainly the U. K, Even with the delta variant really quite rampant in terms of cases because of the high vaccination levels, the U. K. Is still set to continue its reopening path. And we're seeing occupancies bounce up above 60% for the U. K. As a whole. Adding back those temporary closures, if you move on to Slide 38, the U. K. Occupancy on a total room inventory basis drops to about 55%. But that's still a big recovery in a really short amount of time and again, mostly driven by leisure. If you move on to Slide 39, if you index that to 2019, It shows us that U. K. Total room inventory occupancy is now about a third lower than it was in 2019. So not quite yet The strong recovery that we're seeing in the U. S, more group travel already happening in the U. S, more business happening in the U. S. And a stronger leisure market, Less reliant from international is why the U. K. Isn't at that 90%, 95% mark yet. From a rate perspective, Also moving on to Slide 40, we are seeing recovery. And if you look at the U. K. As a benchmark again, You could see that it immediately jumped from being about 40% below 2019 levels to close on 20% below 2019 levels after the reopening, but it has stayed at that level. And we do expect it to recover, but the full recovery will obviously be reliant on Return of international travel and business travel, particularly in London. So moving back to Europe. And if you look on Slide 41, you can see that it is beginning to recover. And we do expect that bounce to come back and be stronger than what it was in last year's summer with more pent up demand, More resilience underpinned by the vaccine rollout. But as that vaccine rollout is not fully complete in many countries, There is, of course, the risk that the delta variant could slow that recovery down. So moving on to Slide 42 And the outlook, it is definitely improving. And flipping over to looking at some of our forward data, so this is looking at business on the Slide 43 shows what business on the books looked like for the next 2 weeks as at the 10th May. And at that stage, it was really only the U. K. That was having any kind of positive trend. So having some growth and had the highest occupancy on the books plus pickup, in other words, rooms that have been sold in the last week for the next 2 weeks. So Slide 43, the U. K. Was definitely leading the way at 22% on the books and everybody else was Below that, if you move on to Slide 44, then occupancy on the books as at the beginning of June was much, much better in the UK, About 32% on the books, picking up 7% each week and that was well ahead of what we're seeing everywhere else in Europe, Underpinned by that earlier reopening in the middle of May, that sort of immediate bounce back of consumer confidence and that really wasn't the case in the rest of Europe yet. And as we move on to Slide 45, we see where we are now on the 5th July. Looking forward, the U. K. Even stronger. So 40% on the books picking up 7% each weeks, which is you add that 7% for 2 weeks in a row Plus a bit more, you get to that 55%, 60% occupancy. And you can see that Ireland is pretty much caught up. Spain is pretty much caught up, and we expect Spain to do a lot more strongly as the key leisure season comes in No. But the rest of Europe is still a good 20 percentage points behind the U. K. So Probably still a month or 2 to catch up to those U. K. Levels and relies on the continued vaccine rollout. And certainly, when you look at German cities on Slide 46, you can see that really only starting to slowly climb now as they come out of the pandemic out of the lockdown. So just a few more slides on the U. K. Recovery because it is such a Strong benchmark for what we expect to happen in the rest of Europe. And splitting it out a bit more between the regional markets and London, London, obviously, more significantly impacted. As you can see on Slide 48, regional markets on a total room inventory basis, occupancy up at 60%, Whereas London is down trending at 40%. And as you look on to Slide 49 Into the future, this shows your business on the books into the future, you can see that the regional U. K. Is likely to continue to outperform London well into Q3 and probably into Q4 because of that less reliance on international and business. But the gap is closing. And the best way to see that gap is closing is on Slide 50 and the momentum that's being built in the market. This shows you that same business on the books into the future, but it's tracked each week Going back to just before the reopening on 17th May. And the important thing to look out for here is As you move forward to where we are now on the 5th July, which is that red line, you can see that each week of Data shows how the business on the books into the future is building each week. So the darker green line is above the lighter green line, which means that we should continue to see Performance improvement as the weeks go on in the regional U. K. And very importantly, the lines to really watch out for are Those dips, because the dips are the midweek, you've got the weekend peaks and the dips. And what we're seeing is the weekend peaks are staying high, But the midweek dips are catching up. And so usually in the regional U. K, you would see the midweek being above the weekend. At the moment, the midweek is lower because of the reliance on business, but we are seeing that catch up And that momentum going out into the future. And the same applies for London. If you look on Slide 51, you can see that it is improving and particularly the midweek is improving. So there definitely are still reasons to be cautious. And if you move on to Slide 50 3, you can look this is looking at forward data and comparing 2 quite comparable markets, Balearic Island, Canary Island, both leisure demand. The main difference between these is a change in or a warning of a change in status certainly in the UK and coming off the green list, which has immediately resulted in a much bigger decline in the Balearic Islands and forward booking cancellations coming through versus Canary Island. So An important reminder that recovery of the hotel sector is reliant on that Restrictions are removed and stay away and consumers have confidence to book again, both from a business and a leisure perspective. So going back to conclusions, we're not here to forecast what's going to happen scientifically from that. But certainly from what we've seen in the U. S. Now is a really good benchmark and really a much more Similar type economy than China from a benchmark for European perspective. It is very positive to see that strong recovery there. I'll go back to those numbers I referenced. Demand index to 2019 Trending well above 90% already. ADR already back at 2019 levels on a nominal basis, 5% behind on a real basis. And when you look at individual hotels, over half of hotels already recovered their RevPAR back to pre pandemic levels. And that is without much international travel at all, pretty much 0. That is certainly with some business Happening and some group happening, a group to back about 50% of what it would be. But even without those fully recovering, that pent up demand really driving strong Rapid recovery across the country. And certainly, that will be the market to watch as we head into August September to see how business travel picks up there as they are ahead of the Europe from a vaccination perspective. So from that point, I will hand it back to you, Lia. Thank you, Robin, for this fantastic hotel market update. And this concludes the presentation part. We're now moving over the Q and A. But please remember that Robin is also on the line. So if you have any questions For him, then it will be greatly appreciated. So operator, we are now ready for questions. Thank you. Ladies and gentlemen, we will now begin the question and answer session. Your first question comes from the line of Simeon Mortensen. Please go ahead. Hi, guys. Hope you can hear me. I just have a question in terms of the deferred rental payments, which seems to be growing In the quarter, in Q on Q in Q1, I think it was €295,000,000 Now it's €364,000,000 on the long term basis. Can you just give us a comment on the payments if you're giving more discounts? Or at what level the payments are coming in? And give us a little flavoring on also on which markets we're talking about these deferred rental payment plans are now increasing in size. Absolutely. Thank you, Simeon. It's like we said on the last call, there is we don't give any rebates On the minimum rent, but we do we have given repayment plans, change repayment plans. This has increased exactly according to plan. These are related to Germany, Andy. And the increase is then for the German operators there. Germany has, as we heard through the presentation, Sandoz will hit pretty hardly. Restrictions are easing more slowly. And also the governmental Sort of right of not paying us sort of immediately Having stronger there. So it's a quarter plan, but we think it's creeping out now. So and the repayments of these will be starting in basically the end of Q3. Okay. Thank you. And just curious, you think it's peaking out now or during Q3? We think it will be peaking out now. There will maybe be some smaller ones in Q3, but in all That's what they are picking out now. We hope And my last okay. Yes, great to see you get a bit of coloring on that. In terms of refinancing, Simone, it has been a while since you have refinanced your debt and it's as it comes more and more near term. Do you have any expectations of when you're going to refinance the debt? And How do you think the pandemic or the situation now might impact that situation and the cost of refinancing Given the what we have behind us and what are you looking forward for us? Yes. Well, as we always do, at Pandas, we thought Also before the pandemic, we started discussions with our banks long, long 9 months, 6 months before anything is due. Everything that's actually due in 2021 It's basically finalized, but we do, of course, have the refinancing done in Q4. So things that are being are due for 2022, we are starting to have in of the presentation. Generally, again, like all this pandemic, Banks have been very supportive. We have refinanced the same amount before. And even though LTVs, of course, have changed a little bit. And all in all, basically same conditions except for the fact that it's Shorter maturities and some 25, 30 basis points above what was expected before. That's also one of the reasons why we rose our refinancing on the shorter term because I think we all I'd like to get out of this before we sort of put the longer maturities in place. Thank you. Those are my questions for now. Thank you. There are no more questions sorry. There's one next question comes from the line of Frederik Sion. Please go ahead. Good morning. I have only one question, and it relates to rental income from the property management unit going into the Q3. So last year, Adjusting for 1, I think it was around SEK 600,000,000. When I read your statement, Leila, in the quarterly report, It sounds like, yes, you're quite cautious on the variable rents going into the second half of twenty twenty second half of this year. Yes. Considering that the occupancy levels generally are higher now than they were During the Q3 of last year, shouldn't we expect that the rental income within property management increasing year over year or are there any other items That I should be aware of. Yes. Again, like we Said the last time and also we want to emphasize that the structure of the agreements when we have revenue base so above minimum the revenue levels, they are looked at on a yearly basis. So in order to get above that minimum rent threshold, in the Nordics, the threshold is typically around 40%, 50% on where we have revenue basis above the minimum rent. Outside the Nordics, it's around 60%, and that's Because we signed the leases more recently because of transactions. But it's basically on a yearly basis. So I'm confident we will fly out of this year in 2021 into 2022 with a different pace. But In order for the hotels that have a minimum threshold, then it needs to be above those levels for the full year. And of course, we started out pretty poorly for the 1st 5 months. Now it's picking up. But in order to sort of get above that, somewhat else will Hopefully do that. But for a yearly basis, we are more But I'm cautious. Okay. So basically, due to the catch up effect, We shouldn't expect much growth for the Q3 then. Well, again, we have the 30 hotels where we don't have minimum rents. We have our operating activities. So there, of course, it's variable from the first krona from the first occupancy percentage. But all in all, it's versus what it should be or was in 2019, 2021 is still the lag in the course of the sort of the first little bit weaker half year than we expect than the second half year. Thank you, Lija. Yes. Maybe I can add also that the pure sort of revenue based agreements that Lija spoke about, 30 or something, mainly in the Nordics. Of course, I mean, in those agreements, prospects are reasonably good for rents to be higher. Absolutely. Yes. Thank you, Anders. Okay. Thank you. Thank you. There are no more questions at this time. Please continue. Okay. That's all, folks. Thank you for participating in this call. I know there's a lot of reports out there. You're all busy and you all want to go out in this nice weather, but we are really appreciating that you're listening in. Our Q3 2021 interim report is published on the 27th October. So thank you. Stay safe and stay at our hotels and have a great summer. Goodbye.