Earnings Call: Q4 2020

Feb 11, 2021

Thank you very much. Welcome, everyone, to this presentation of Pandoc's 4th quarter and year end report for 2020 on this beautiful winter stay in Stockholm. I'm Anders Berring. I'm Head of IR at Pandox. And with me, as usual, I have Anders Knissen, our CEO and Liano, our CFO. And like last time, during this difficult market situation, we have an external guest with us, that is Robin Rosman, Managing Director of International at SGR. And as you know, by now, he represents a leading independent research firm focused on the hotel market, and he will share his view on this market. So we are very happy to have him on board for this presentation. As usual, we divide the presentation into 3 parts. We start with a business update and financial highlights from Anders and Lia. And then we hand over to Robin, and then we conclude everything with questions. So with that, Anders? Well, thank you very much, and welcome everyone even from my desk. Let me start this presentation by give you a short Pandox update. Pandox is one of Europe's largest hotel property company. We own we have a portfolio with 156 hotels with 35,000 rooms in 15 countries. We are managing in 2 different segments, property management and operator activities. Property Management is our lease portfolio that we lease out hotels to professional operators in normally turnover based contract with a minimum level representing 84% of our market value. And we also our segment is operator activities that we own and operate ourselves under an independent brand or under a franchise model, that's representing 16% of the company. The next page, please. And this shows our strong world class network of brands and partner. And as you can see, it takes long time to build up the sort of strategic position. And this is, of course, strange on these days that we both have the capacity of taking over hotel if we need to, if our partner didn't perform, or we can find other tailor made situation together with our partners. Let me then move over to Q4 in brief. Let me start to say that we had a quite promising start of the quarter and it came from a good start after holiday, But with new restrictions of the 2nd wave, demand flow away and there was no chance to run an efficient hotel business in Q4. Despite of this, we are again profitable before value changes. And we have a positive cash flow So that meaning that our financial situation is continues strong and we have also good liquidity position. Some quick numbers. Return on equity, minus 10% of total operating net Operating income is minus EUR 53,000,000 and like for like property management is minus EUR 26,000,000. I really hope it's the last time I need to present this sort of number. Before we had an average 18% return on equity in 25 years. So now we have And learn that it also can have a minus in front of this signals. Again, strong financial position, SEK 5,500,000,000. And with that, I hand over to our CFO, Lianne Ulf. Thank you, Anders. We're now at Page 5. Yes. As Anders just said, demand on the hotel market decreased in the 4th quarter and contractual minimum rent and ZAR6 trends for Pandoc's main sources of income. We expect this to be the case also in the Q1 of 2021. We had negative unrealized value changes in both property management and operating activities, which reflect lower expected cash flows. I will come back to this in a minute. At the end of the Q4, accounts receivable related to new payment terms, temporary new payment terms amounted to the SEK 439,000,000, which is in line with the 3rd quarter. Next page please, Page 6. Pandex revenue base is diversified with revenues from different operational models and geographies. Currently, minimum rents and fixed rents are Pandox main sources of revenue. This amount to almost SEK 2,000,000,000 per year or almost SEK 500,000,000 per quarter. In the Q4, revenue based rent amounted to SEK 48,000,000. For the full year, revenue based rent amounted to SEK 2 €49,000,000 Rent collection has progressed in line with new and temporary payment terms. No reductions in hotel rents have been given. In the 4th quarter, revenues from operating activities amounted to SEK 117,000,000. Next page, please. In the Q4, Pandoc valued the property portfolio according to the same method and model used since the IPO 2015. Values have been adjusted downward due to lower anticipated cash flows, mainly as a result of COVID-nineteen. Yields are largely unchanged due to still inconclusive transaction evidence. As we learn more about the effects of the COVID-nineteen crisis, we expect to be able to estimate both yields and cash flows with great position. Only some 60 external valuations were made during 2020 due to practical limitations due to COVID-nineteen. External valuations exhibit larger dispersion both between and both within and between markets. External valuations are on average some 6% below Pandox internal valuations, all due to deal assumptions. The valuation difference is small in the Nordics and larger outside the Nordics. In the Q4, total unrealized and realized changes in value amounted to a negative SEK 634,000,000, of which negative SEK 533,000,000 for investment properties and a negative SEK 101,000,000 for operating properties. Please note that according to IFRS, unrealized changes in value for operating profit are only reported for information purposes, but it's included in the IFRS numbers. End of period, the average valuation yield for investment properties was 5.44 percent. And for operating properties, it was 6.37%. Next page please, Page 8. Finally, let's take a quick look at our Efronor and financial positions. End of period Efronor per share amounted to around DKK 167.6. This corresponds to a decrease of approximately 10% on an annualized basis. Loan to value amounted to 48.7 percent. Cash and cash equivalents and long term unutilized credit facilities amounted to approximately SEK 5,200,000,000. Credit facilities maturing in less than a year amount to approximately SEK 5,500,000,000, of which approximately SEK 3,800,000,000 will mature in December 2021. Pandox has a positive and close dialogue with its lenders on new financing, refinancing as well as adjustment of terms and covenants in existing credit agreements with consideration to COVID-nineteen. In the Q4, lenders have given waivers in individual credit agreements. Next page, please. And with this, I hand back to Anders again. Thank you, Lia. Yes, let's move I will go for a more market related presentation. And let me start to say that since this COVID-nineteen arrived in our life, we have had 3 focus areas in Pandox respond, restart and reinvent. The respond has been how to manage this acute phase of the crisis. Basically, secure liquidity, make sure our banks understand what we are doing and frequently contact with our partners. And Of course, we use cost in our international operations. The start is how to plan for the recovery, how we do, how we do analysis, So what sort of information we need to have and how we put it together in presentation. That's what we have done 2 times before and we do it also today. And reinvent what's next. What can we expect to the telemarket? And that's something we have spent a lot of time on Opandox. One day, in other market day, we can we will happy to share this sort of information. So let me then go over for market status and condition for recovery. Let me then also start to say that Wutel market is one of the Pandamin's world's victim, we all know that. I believe that the challenge now is to understand what the recovery will look like. At the first glance, I speak for everyone, it may look simple. But to understand The market is requiring in deep analysis for how different segment will develop and interact with destination specific factors. You will see that later. And this pandemic had increased its complexity again, I would say, even more. In Pandox, we regular monitor hundreds of different markets and do analysis of short and long term. So now we now provide and share some of these data, which can be guidelines for you all for how you believe that the conditions for recovery will be. So then what we will do, we will present 4 different areas. The first is recap, Hotel Market Development 2020, short recap. We will show demand segment in Pandox portfolio to have and deeper understanding that market had many different segments and patterns. We will explore the telemarket outside Europe and their drivers recovery, and then we will gain new insight for recovery. So next page, please, Page 11. This is Pandok's way of looking at how development will come back in levels before full performance. It's Starting with city and country must open up, I mean, restriction have to go down. Hotel open up, then the domestic leisure will return to this domestic business will return. After that, international meeting and group will return. When we had our call in Q3, we were something between level 34. Now we are back to 1 and 2 again. Next page, please. Page 12. COVID-nineteen, as we remember, the first virus arrived in Northern Europe in March 2020, Society closed down, market bottomed out in April and when restriction are lifted in June, July, the recovery starts. Page 13. During the summer, demand increased rapidly, first in Scandinavian and then in Europe, the same thing, domestic driver domestic leisure was the driver. After the vacation period, leisure demand remained stable over weekends and domestic business began to travel with first sign of smaller meetings, domestic business in terms of smaller and medium sized companies, Page 14. In September, occupancy was 45% to 55% in most of Pandox domestic markets. Up to this point, I believe the recovery was faster than many expected. However, demand in larger and more international city remained weak. Page 15, please. In October, We had this quite good position with a good domestic demand. And then when the second wave was came a new restriction were implemented, it became much more difficult to operate the tails again and demand decreased substantially across all segment. Page 16. This is the same presentation, but in number, you see Germany had a good start A market collapse in March came back over summer. And this is the total market, so domestic market was slightly better. And then everything came down again when new restriction was implemented. Page number 17 shows U. K. Again, good start, collapse April, March and then very hard restriction up to beginning of July, despite of that Strong August, September, promising into October, but then the wind restriction was implemented, even U. K. Came down to very low level. And the Nordic, same some sort of same pattern as well. Now we are at Page 19. And now that was Page 18. So And to sum up 2020, as you had see the market developing stages that it's good to have with you when you look at 2021 with a strong dominance of domestic demand. Don't forget that domestic demand where Pandox has our base is the largest and most important segment, 3.5 times bigger than international segment. So that is, of course, it's strong that the domestic business has been good when the restriction has come down. And that is if restriction are holding back demand. And other way around, when we're fixing easier, demand is coming back, also something we have learned in 2020. And again, we don't see in so far any big change in consumer behaviors. Let's then move over to picture 19, which it's about segmentation. And Pandoc's portfolio can be divided into 6 different segments: Interstate, resort, airport, suburbs, regional, smaller and larger city. And as you can see, market the segment had totally different pattern due to different drivers. Large cities, what we normally refer to as international demand, And that is mostly what international investor has focused on. But you can see that most of the other segment performing much better. And I don't think Total Market can be presenting with one line, it's just an average number and not an analysis. So if you look here, you can see that Panlog's performing very different in different segment and so it is for every hotel company on even globally. So that is something we also can take with us that you need to look at is by segment and in stages. If we then go over to guidelines for recovery, we are choosing 4 markets: China, New Zealand, Australia and India in Page number 21. And why this? They are relevant because they are well ahead in the recovery. They are well developed markets with many different segments. They have a mix of domestic and international and a considerable inbound and outbound travels. Page 22. This is China. I believe Robin maybe will also talk about China. China is the market who is first in line. And you can see now that China's domestic market representing by leisure and domestic operations now are close to the total demand of domestic and international markets in 2019. I will call it a bit sensational because that mean that domestic demand in regional City in China is above the level of 2019. And the conclusion is that the conclusion is that people continue to travel. If they are not allowed to travel internationally, then they travel in their country. And if you're not possible to have meeting out of China, then you have them in China in different ways. And this is something very exciting way for us, of course, to understand more about China's development now the next couple of months. And then you have New Zealand, you have Australian 24 and you have Indian, which are similar in stages. It's a similar pattern, open up in stages, domestic demand is the driver And all of them are coming up now close to the total demand for 2019. So When we have now look at 2020, learn from that, look at segmentation, yet an inside OXXO market who is ahead of Europe, we can now give you some sort of outlook what we believe it will be. Demand will be lower in Q1, and that is ongoing restrictions, nothing we can do about that. We are halfway into Q1. But in Q2, given a successful vaccinations and reduced restrictions, of course, demand will return in stages with individual leisure will return fast, which will follow by domestic business travels by small or medium sized markets, and there will be strong recovery in domestic market. This is the same pattern as we see in market who is in head of Europe. The summer, my friend, there will be a bomb or as we say in Southern Sweden language, it will be a dent. There will be I can't I think no one can wait for be stay in hotels or sitting in restaurants for this summer. And the period after summer could be very exciting with first sign of meeting in international travelers. With that, I would now would like to hand over to our guest speaker, Robin Rosman for hotel market update. And please remember that Robin is totally separate from Pandox And his research is totally separate from Pandox. So please go ahead, Ravi. Thank you so much, Anders. Can you hear me all right just to confirm before I go? Oh, yes. Excellent. So I think the next few slides that I share will follow on and build on a lot of what Anders has talked about there. And I'm sorry, we're going to focus on Europe. But again, I will use some benchmarks from other countries and regions of the world to help validate and explain the way that we think that the recovery will take shape and look like across Europe in 2021 and beyond. And just moving on Slide 28, Sort of for this year, much like last year, I don't think you can look at it as just 1 year. The performance by quarter is going to be very different, just like it was very different in 2020. And so moving on to Slide 29, really there's no good way to paint the picture of what Q1 is like To be. Because if you move on to Slide 30, you can see that all across Europe, We've seen occupancies really since the beginning of December dip back down and then further down in January as a result of the second wave of cases and lockdowns across Europe. And we're seeing occupancy levels that are just as bad if not worse than what we saw back in April May. And the reason for that, one of the reasons why the performance moving on to Slide 31 is currently worse than what we saw in April May. We saw far more hotels close In April and May, I think we saw more specific government requirements and uncertainty around whether or not hotels could stay open. So we saw Across Europe, really 2 out of every 3 hotels closed. So 2 thirds of the market closed. And that meant that the demand that was left was shared by only a third of hotels that remained open. However, this time around, The restrictions haven't been the government restrictions haven't been as harsh. There's been more certainty that hotels can remain open as long as they're only serving business customers where leisure demand has been forbidden. Travel has been stopped at this stage. And so as a result, we've seen currently only about 2 in every 10 hotels close. So far less hotels close. And the reason that less hotels are closed is That many learned from the 1st lockdown, the hotels that remained open were able to be far more resilient and perform far better coming out of the 1st round of lockdown. So Better cost control and also have led that to retain revenue coming out of the lockdown. It's important to be open before everybody else. So We've seen far less hotels close. And as a result, if you move on to Slide 32, there's Really more demand going around in the 1st set of lockdowns, but it's shared amongst the greater amount of open hotels. And so the Occupancy of those open hotels is lower. And we report performance in 2 ways. The teal line at the top there, and this is just showing it for the U. K, is the occupancy of open hotels. So we only collect only collecting and showing the occupancy of open hotels. But we also obviously See the importance of tracking the occupancy of all those hotels that were temporarily closed were actually open, so showing true market occupancy. And that's the dark blue line and we call that total room inventory. So you can see back in April May in the UK, open hotels were trading at 20% to 30% occupancy. But if you added back all those closed hotels, the market would have been trading at 5% to 10%. And so that's why this time around less hotels closed, you can see that gap is much narrower and that the Tier 11 occupancy is just below What it was in April May. So that's just the way of saying it may look worse. It's certainly bad, but where it's worse because Really more hotels are open, not less demand. Nonetheless, pretty terrible Q1 and don't really see it getting much better for most of it Because when you move on to Slide 33 and look at the forward bookings that we're collecting across Europe, You can see current business on the books for the next 90 days, how many rooms have already been sold for the next 90 days. This number would typically be much closer to 40% to 50%. It's now single digits. And the pickup, In other words, the room that was sold in the last week for the next 90 days, you'd usually expect this to be positive. In other words, you were selling rooms every week For stay dates in the future, it's 0. So not great. And obviously, this is because of where we are in terms of lockdowns and uncertainty and cases. So That I'm afraid is going to be the story of the Q1. But moving on to Slide 34, we really do believe that we will see recovery starting in Q2. Now for Q2 and onwards and the rest of the year. The big assumption, the scenario that we are assuming here is that the combination of the impact of the lockdowns, which push cases and the risk of overcapacity of hospitalizations down together with at a minimum warmer weather, which should typically reduce The case, the spread of the disease like it did last year, as well as hopefully and certainly my personal belief is that a successful vaccination rollout, even if it is going slower than we would like, successful vaccination rollout across Europe, which sees the vast majority of the vulnerable portion of population that are most at risk of being hospitalized and deaths being completed During Q2, which means that at a minimum, even if international is still somewhat restricted, domestic recovery should start in Q2 and will start earlier in those countries that are able to get to that safety level first. And so what that means and this is going back to on Slide 35, some 2019, 2020 data. Similar to what As I said, we do expect the domestic regional markets to recover faster than certainly Gateway City. Here you see Gateway City occupancy in 2019 and And see in 2019 and in those really big countries with big gateway cities like the UK, Netherlands, France, London, Amsterdam, Paris would all have occupancies of 10 percentage points higher than the regional markets. If you go across to Slide 36, and apologies, I just realized that the order of the countries have changed. It's Not exactly the same countries, but the trend has nonetheless true. We've seen in 2020 that obviously with international demand going away, less high end business demand, those gateway city occupancies have dropped to be below or the same as the regional markets. And so Again, whereas in the past, those Bay Area cities would be 10 percentage points higher in occupancy, they're now 10 percentage points Lower. And on Slide 37, what we also saw in 2020 is that from a rate perspective, Those gateway cities had rate declines of 20% to 30%, whereas regional markets were much more resilient, declines of maybe up to 10%, 15% or in even many cases flat or Turkey as an exception currency driven was positive. So we are expecting that regional recovery to come and more on that in a bit. But as we get through Q2 towards the end and the leisure season starts, I have a high degree of confidence that we will see a large Catch up, excuse me, I do like a pun, and recovery from Q3 onwards really underpinned by that leisure growth. And if it's allowed international recovery too. And clearly international is going to be the most difficult to recover, but I'll switch to some international benchmarks to show just how quickly it can recover. And on Slide 39, you can see Dubai occupancy 2019 versus 2020. Dubai had some of the strictest lockdowns back in the early days of the pandemic. And we're quite slow to reopen their borders. So demand up until October, November was purely domestic. That's from November onwards, they opened up and you could travel to Dubai as long as you had a negative test on arrival, no quarantine requirement and rather remarkably You can see how quickly the occupancy recovered to pretty close to 20 or prior year levels. And that really is remarkable because that was absolutely international demand, people getting on a flight that drove that. And moving on to Slide 40, it wasn't exactly like the hotels had to drop their rates to achieve that. They actually recovered back to 2019 sorry, the legend says occupancy, but it's actually rates. They dropped back to 2019 rates. I mean, they've got that to prior rates pretty quickly. Now clearly, the bio shows that maybe that was a bit too soon in terms of they hadn't fully Connected their local population and so there's been a jump in cases there again and certainly global restrictions and travel that have resumed meant that demand has dropped away a bit. But What it does show us is just how ready people are to get on a flight and travel to escape and have that leisure demand. And I think that will be true in Europe as we get to the summer months. And moving on to Slide 41, another example, Maldives, again, really just rapidly bouncing back So prior occupancy levels dipping down a bit again in January February, which is more of source market restrictions. But strong confidence that when we're allowed to travel, people will travel and probably as much more than they did before to catch up on what they've missed out on. So moving back to Europe, I think it's important to say that even with in many cases government mandated No travel messages. People are still booking ahead from June onwards, planning ahead to those events. So we do have business on the books across a selection of European markets where there are events and people have that they are planning to travel on the assumption that they can. And as we get into Q3, I think that the trend that will really play out is something that we saw and this is going back to 2020 data, is that the recovery will be strongest And leisure markets and leisure hotels, obviously, leisure hotels can be anything from luxury down to mid scale and economy. The leisure hotels that are able to be accessed by a car instead of by air will drive greater recovery. And here you can see just the UK as an example, looking across 2020 occupancy versus prior year, The blue line is mid scale and economy. So budget and economy hotels recovered occupancy stronger, particularly around that key holiday season. Then in purple, we have upper upscale and upper midscale sorry, upper midscale and upscale hotels. And then the ones that found it most difficult were luxury at the bottom there, the most significant declines in prior year, the least recovery. But that was when you look at the U. K. As a whole. If you split out that data and you go on Slide 44 and you split it between London, which is the full colored line versus the dotted line, which is regional markets. You can see those regional markets, all of them from budget 3 to luxury outperformed the London market. And certainly, the luxury hotels were much closer to budget hotel performance, Particularly because of those that are leisure driven. And in actual fact, when we look at rates, on a rate perspective, looking at the UK as a whole, pretty tight. But when you split it out to regional UK and London, you can see that gap there, regional markets much more resilient, Much lower rate declines. And an actual fact that luxury hotels showing some rate gains where because there was a lack of luxury and upper upscale high end leisure supply in the UK, lots of demand having rate increases year on year. So I think any hotels that are positioned for that domestic leisure will do much better and recover faster. But On to the long term and going back to some international benchmarks on Slide 47 and then on to 48. China and whenever we talk about China as a benchmark, people go, oh, you can't use China. It's not relevant. It's completely different. And yes, You're right. China is a different country, but it is not Mars. It's not Martians. People travel in China for the same reasons that people travel in the U. S. For the same reasons that people travel in Europe and that is for leisure, to visit family and for business for the same reasons. And the reason why China is an important benchmark is Even though it's completely different in terms of the control of the virus, they've managed to get the virus under control there. It shows you just how quickly that domestic recovery, that domestic business demand can come back. And the best way to show it is we've shown performance here. This is Rev Par change, so Anders showed occupancy. This is taking into account rate 2. This is rate par change versus prior year same week. Mainland China on the left, 1st tier cities, Beijing, Shanghai in the middle and other cities on the right. And if you Meg, if you start from the right, you can see all the way back from September and before RevPAR for those other cities outside those 1st year cities, rely more on international demand, has been in many cases flat or positive, a little bit down there in Late December, January as a second round of cases came through. But I understand from our team on the ground and from looking at the data that that's pretty much resolved again. And the spot that you can see there in January is really a change in timing slightly earlier Chinese New Year, which obviously started just a few days ago and people stopped traveling before that. So really showing that in China, Demand has been able to bounce back. People are traveling. Zoom has not killed business travel. And yes, 1st year cities are a bit lower, trending about 20% to 30% lower, but because of the increased reliance on that international demand. And on that point, If we go across to Australia and I showed it a bit earlier, I think Australia is a really good benchmark for hopefully where we will get to in Q3, Q4 for Europe, maybe more Q4 than Q3 when it's more about business demand because Australia is obviously a country got the virus under control that has turned off the tax to international demand. And you can see that I mean, like pretty much back to normal people in stadiums watching sporting events, all of that, nonetheless, RevPAR again 40% below what it would usually be and that 40% is the international gap again seen more in gateway cities and in regional markets. So remember that 40% because in a couple of slides it will come back again. Moving on to Slide 50, This is what we expect for Europe. As I said, more of a W shaped recovery. We had that recovery in the summer months, dropped down now with 2nd line of lockdowns and we see that recovery back in 2021 from an occupancy perspective. Where we think that will end up, Moving on to Slide 51, this is an aggregate of forecast across a selection of gateway cities. So these are probably more impacted than most. Is that for 2021, we'll end up with a RevPAR roundabout 40% below what it would have been in the prior year. And that's going back to that Australia example, because of the gap and the slower recovery in international demand. We think it will Take a while to recover all of that. I certainly hope that and I believe there is a chance that the recovery will be faster than this. Based on the way we've modeled it out, looking at the recovery pattern and profile we saw coming out of global financial processes and other downturns, looking at macro economic factors and forecasts looking at the supply forecast for the hotel markets, we do see it taking up to 2024 and potentially beyond to get back to those 2019 levels. And but it really will depend on the shape of the economic recovery. And it really will depend, moving on to Slide 52, the And degree to whichever market the hotel is in is reliant on international versus domestic demand. And so with that, I will say thank you very much and thanks for having me along. Happy to answer any questions. Thank you very much, Robin. And with this, we move into the Q and A session. So please, operator? All right. Thank you. Ladies and gentlemen, we will now begin the Q and A session. Okay. Your first question comes from the line of Frederic Sayen from Carnegie. Please ask your question. Good morning. Yes, a couple of questions from my side. So starting off with, I guess, the $1,000,000 question, but How do you perceive Q2 2021 year over year versus Q2 2020? I do believe we witnessed an improvement on a year on year basis. Good morning. Well, we haven't given any specific forecast for Q2 2021. But given a successful vaccination, the market will be, And of course, coming back quite immediately, but we believe and as we said before in stages And that will, of course, be much better than Q2 2020. So a positive trend. But it had to be restriction had to go down. And if the restriction go down more than we expected, then the market also will go up more. The following And then the yes. And second question on accounts receivable, they increased slightly in the 4th quarter. Do you anticipate that this line will continue to increase moving into 2021? Yes. Hi. Actually, it was margin it's actually it's in line because it's only reporting how much we actually have Signed the agreement. So actually, it was actually SEK 2,000,000 decrease. And as I said last time, we didn't expect it to be above €500,000,000 A lot of the agreements are running off. We have some new ones coming in or which we agreed on End of the year. But we don't expect this to increase, but stay on the level and decrease over time. Okay. And then the external valuation, as I understood it, on average, They were 6% below the internal valuation. And you mentioned that one of the differences was Yield requirements, is there anything else? And why haven't you adjusted more based on the external relation? Well, as you know, we do the same way of method of evaluating all our hotels every quarter. The only difference one can actually say is the yield long term yield requirements, which the external appraisers Outside the Nordic has used. Within the Nordics, we are very much in line. Cash flow wise, we do have approximately the same expectations of the COVID-nineteen. But for Fratiktsson appraisers outside cited in Nordic have a higher yield requirements even long term. We don't See that evidence of any transaction is the opposite actually. Why we and Well, there is insufficient evidence because there is very few transactions being made. If anything, they are actually at better yields. So we think it's insufficient for making valuation changes on that basis. But again, it's purely outside the Nordic. If this would be the case, we will be able to buy cheaply outside the Nordics. We don't see that at all. That's clearly. And then my final question, a question I've asked it before. Do you see any risks So having to take over any hotels for own operations in the near future? No. Our partners are large Professional operators and they are what we can of what we have the information about. They all have a financial stable situation. So We have no plans of taking over. We believe that we will go out together on this crisis and do business on the other side with all of that. Okay. Thanks for taking my questions. Thank you very much. Thank you. Thank you. And your next question comes from the line of Chris Fermantel from Morgan Stanley. Please ask your question. Hi, good morning. I just wanted to make sure I had understood what you were saying on valuations. You went through it relatively quickly. So can you just explain what proportion of the total number of hotels By value have been externally valued. Well, as we mentioned And of the I'm sorry. And of the 5% year to date change, And what is that number for the internal valuations please? Well, I'm not 100% Sure of the questions, but let me start. We have for the year decreased the value of to 4.8 percent out of which investment property is 3.3 percent and operating property is 10.4 percent. So in total, close to 5% down versus December 2019. We have done 60, six-zero valuations out of 156 hotels We have external valuations. Of course, we do internal valuations of all our 156 hotels. The difference of the external valuations versus the our internal valuations have been on average 6%, As I mentioned, to Carnegie, to Sorry, does that mean that your valuations at beginning of the year were in line with external valuations. And they have moved their valuations down By 6 percentage points more than what you have moved them down. What is the valuation decline that the External valuers have moved their valuations down. So we are in the end of December 2020 For the properties outside the Nordic mainly, there is a 6% Difference in the valuation, in the value amount. And that's all Let me ask in a different way. Let me ask Requirements long term, I. E. I appreciate you've said that there is a 6% Difference, what I'm asking you is, what is the valuation change that you have applied when you haven't had them externally valued? And what is the valuation change for those that have been externally valued? I appreciate there's a difference. I appreciate there's a 6 percentage point difference. But what is the valuation change for the externally valued ones? That will allow me to have a flavor for the valuation change, the internal and the external. So have you made a valuation change for your internally valued hotels? Or have you Not revalued them at all? We have revalued all of our in all our properties, as you say, with 5%, but we kept the yields unchanged basically. So the total 5% downward adjustments for the full year is mainly or Or more exclusively due to lower cash flow due to COVID-nineteen, but we kept the yield requirements, both the yield and the terminal yield requirements basically unchanged. When we do external valuations, which we do for reference points. Then the external valuations we have done, which are 60 in total in 2020. Then especially the operators outside the Nordic region have used A higher yield requirement long term. Yes. And that's a good question, but that is basically the difference. They don't believe that this our industry will coming back in 10 years. And that is something that is very surprising. For the rest, we agree about everything. And I will say if we don't think that was a penalty in the swing back in 10 years then I don't think that I have the job still. So we don't think that they are right. We I think we have a stronger point when we look at the future. But we have done and as I said, we have given the deals we for Hanwha investment profit of SEK 5.44 and operating profit of SEK 6.37 There is a it's a larger proportion of external valuations done on outside the Nordic Versus within the Nordic, constituting the 6%. But this is basically numbers I can give you for time being. Okay. Lots of information, not the answer to my question. But can I ask one further one final question just to try and understand what's going on here? The yield figure that you provide, the EUR 5,400,000,000, what is the numerator? What is the top of that yield? What does that apply? What does that signify? Is because Clearly, the normally a yield has a net rent at the top and a value at the bottom. The net rent is clearly very different to what it was at the beginning of the year. So can you just help me understand what the Yield what the top of that yield equation actually applies to? Is it a pre COVID rent figure or what? It's The rent figure, it's, of course, our guaranteed rents for investment properties. And it's the we do Forecast of our cash flow and our rents every quarter. So basically every quarter, we internally take A 10 year view of each individual property, how the rents will develop over this time. Then we adapt or apply a discount figure and including a terminal valued discount yield, which then, of course, gives the value of the property. And this is the sort of the blended yield. So we do change the rent, of course. This is and in line with the prices, we also have a view of when and how rents and markets are coming back. This is the reason why we are continuing to write down On the assets every quarter, because theoretically, if we had one view and it would be the same as we had in Q1, Then of course, you leave the bad quarters behind you. But unfortunately, the restrictions have continued and even increased, especially now during the autumn. So this is the sort of the cash flow reasons why we do have these write downs. All right. I'll leave it there. Maybe we take it offline. You're absolutely welcome to comment. Okay. Thank you. Your next question comes from the line of Victor Krauter. Please ask your question. Yes. Thank you so much. I have a few questions here. First about the market. You talked about your market expectations, but Could you guide on when you expect restrictions to be removed and traveling gradually coming back to normal? Well, I wish I could. I am in the hands of authorities. And as you know, it's I wish it was the Pandox So management who has that decision right, so I don't know. But given the successful valuation, I think it will look much easier and Vaccinations. Vaccinations, sorry. Not to buy it, so it's a vaccination. We believe that will be in line with the forecast that Robin Yes. Okay. Thank you. And the booking situation today compared to 3 months ago, but also compared to 12 months ago. And is there anything that you'd like to evaluate on that? Now What we see first, we need to understand that Germany and U. K, even Netherlands are in still lockdown, completely locked down. People are not allowed to go out in the evening. So we need to understand that. In Sweden, it's a little bit different. So in Sweden, we already see the first pickup in leisure over weekends. You will be surprised the numbers if I tell you that many hotels today have 50%, 60% every weekends, and this is domestic leisure, who is the driver. If you look ahead and go after summer, it looked quite promising in many hotels, and we need to do more analysis. One of the reason is that people have moved meetings from This COVID-nineteen when it's arrived here from the spring or in the summer up to this after summer this year. So we don't know how much of that is. But we had also seen and some sort even if in our own hotels some sort of small movements into it, but of course, it's very quiet. So but if we look at how it also was in market division, Head of Europe, is start to say. It was a lockdown, individual leisure start to travel over weekends, restriction came down, individual business start to travel and then we are where we are today in China and India. I believe we will have the same pattern in Europe. Okay. Thanks. And my impression is that the discipline to maintain prices has been relatively strong. Is the risk that when all hotels that has been closed during the pandemic will open up, they will start to compete with price? It's always a risk, but I think most of the people, they understand that price will not drive the demand for the total market. I think that people have been having quite good discipline. And so far, the price had been surprisingly stable. Okay. Do you expect the losses from the operator activities to increase further in Q1 Compared to Q4 and also compared to Q2? Yes. We are absolutely in the bottom now. We are in Belgium, as you know, with a large portfolio, and that is Totally locked down. You're not allowed to drink a cup of coffee outside. So things will be better. But everything is about restriction. Given that and you see that the virus spread is now going down and given that they have a confidence to start to increase that, of course, people will start to travel. And when people start to travel, then we have, of course, the strongest pickup we have in our operator activities. And just short on in Sweden, there's been discussions about new government Support packages. Do you see similar discussions in other countries as well? Is that anything you want to comment on? Yes. Yes. That is in every country have different models, but in generally, they try to support. Germany is probably the best, but And so yes, that is support program, yes, for everyone except of the property owners. I see. Right. And how much government support is included in the income for Q4 for 2020 in your figures? NOK 19,000,000 in sorry, I don't have the I think let's I think it's in It's actually in the report. But for the full year, it's SEK 35,000,000 in property management. And then there is a bit more complicated calculation regarding operator activities also, €31,000,000 for the quarter and €117,000,000 for the full year. But it depends whether it goes through our books or straight to the employees. But Page 3 in the report, everything is there. Thank you. Sorry about that. Just short on your tenants, the operators default risks For any of the larger ones, I. E. Leonardo? No. Leonardo is owned by Fattal. Fattal Group is a public company in Israel. What we can see in their share price is doing well and they have a strong financial position. So they are a large Scandic and stronger financial position as we understand it. And also the rest is has been from the information that we has been including that all of them are in good shape or not in good shape, but they are in a financial position that it will definitely survive. Okay. And just on Scandi quickly, you do you have any Sorry, how is your relation? And do you have any rent receivables? If so, how much? And well, we didn't split up this in different companies, but We have a good relationship with Scandic. They pay their rent and we try to support them with Payment terms. So that's what it is. And nothing about the negotiations there? Well, no, no, we are not the negotiation. Our rent, it is Everybody need to pay the minimum rent and Pandox and Scandic also do that. It was just stated that SEK 375,000,000 in 2022 would expire, and that's about 20% of Rental value, is that all Scandic or the 17 Scandic Hotels? Yes, that is 2022 and that is a portfolio in Scandinavian portfolio with high quality. So that is Okay. Something we're looking forward to negotiate. All right. Thank you. Thank you. Thank you. There are no further questions at this time. Back to you, Anders. Well, thank you all to listen to Pandoc's report. And thank you very much, Robin, for participating again and give an excellent presentation. And Wish you all the best. And those of you who need to have more questions, you are welcome to Lia and me. You have our contact informations. Have a good day. Bye bye.