Entra ASA

OSE:ENTRA

Earnings Call Transcript 2020-Q2

[Sonja Horn, Chief Executive Officer]

Good morning and welcome to Entra's second quarter presentation brought you here live from Oslo. We thought we would start by giving a short update on the COVID-19 situation here in Norway. The virus situation is currently under control in Norway. We have very few new cases on a daily basis, and we've had a total of 9,000 cases approximately confirmed so far and 251 casualties. Since April, the society has opened up again, and we currently see that most activities and also businesses have reopened. And many people have also returned to their offices, and companies need to comply with social distancing requirements of 1 meter. The main constraint, however, in Oslo is Oslo municipalities' joint call for an effort to keep the pressure low on public transportation during the rush hours in the capital. And if you take a look at the Norwegian economy, it's showing signs of improvement, and the activity has picked up actually faster than was expected a couple of months ago. The GDP is for 2020 expected to come out with a negative of 3.5% compared to expectations back in April of minus 5.5%. Private consumption is picking up, and we do also expect to see public spending increasing going forward. Currently, the unemployment rate is at 5.7% and it's expected to trail off down towards 4% by the end of the year. We have seen a very expansive fiscal stimulus package in Norway also spending from the Norwegian oil fund. The key policy rate has been reduced with 150 basis points and is currently at 0%. Increasing oil prices, combined with strong tax incentives, have also supported the oil and gas industry, so that the decline in investments and activity is reduced. Lower international demand and also our export is, however, expected to be affected going forward due to the global economic downturn. If we move on to Entra, what we have seen is that the effects of the COVID-19 lockdown and also the infection control measures have had a very limited effect on our operations and financials in the quarter and also so far. Our rental income came in at NOK 587 million for the second quarter compared to NOK 580 million in the same quarter last year. Net income from property management was NOK 350 million, and we saw net value changes in the portfolio of NOK 591 million. Keep in mind that we chose to keep our values on the property portfolio from Q4. Anders will get back to that further in the presentation. Profit before tax came out at NOK 940 million this quarter. We have also had a solid quarter in respect of letting with a net letting of NOK 14 million. And we have started 2 new refurbishment projects this quarter, one in Drammen just outside Oslo and one in the center of Oslo. The Board has decided to pay out a semiannual dividend of NOK 2.4 for the first half of this year. It's to be paid out on October 12 based on shareholders by October 1. We were pleased to see that we maintained the very high activity in respect of letting in the rather challenging market situation we are in. And we signed new leases on 41,000 square meters this quarter with a rental income of NOK 95 million. On our renegotiations, we saw a rental uptick of 17%. We had terminations in the quarter of NOK 38 million. Out of that, about 25% is related to the new contracts signed in the quarter. And as you can see from the list table below, there were some really large contracts this quarter, one with the municipality of Oslo. They signed 10,100 square meters at Hagegata Toyen. That's also where we will be starting one of the refurbishment projects. And Statsbygg did a prolongation in our building next door here at Biskop Gunnerus gate 9 were 6 -- sorry, where they renegotiated 9,300 square meters. At Grnland 32 in Drammen, we have signed a new contract of 5,000 square meters also here with a public tenant. And here, we will also start a refurbishment. At Langkaia in Oslo, 2 new contracts, one of 1,400 with a private tenant and another 1,100 square meters with a public tenant. So net letting in the quarter of 14 million. And our occupancy is currently at 97.6%, an average WAULT of 6.7 years. As mentioned, starting 2 new refurbishment projects this quarter. The refurbishments are then a result of the large contracts signed. And we always have solid return requirements in the calculations we do prior to these refurbishments. We have a policy of reporting of all investment decisions above 50 million, which is why these now also will be included in our project reporting going forward. Keep in mind that the total project cost here is the sum of the project cost and also the relative share of the initial value of the property. In Toyen, Oslo, the municipality is opening a community house where the 10,000 square meters will be redesigned to their new concept. And the total project cost here will be NOK 433 million, yield on cost of 5.5%, and it's expected to be completed in the fourth quarter next year. The project in Drammen is again let to Vestre Viken Hospitality Trust, a public tenant. Here, the total project cost will be NOK 158 million, yield on cost of 7% and expected to be completed in the second quarter next year. So as you can see then, these 2 new projects have been included at the bottom of the list under the headline Refurbishments, whilst the redevelopments at the top of the list are the projects where we work with knockdown rebuilds or total transformation of our buildings. All our projects are processing according to plan. And there is one change in the table. You can see the occupancy is slightly up at Universitetsgata 2 from 18% to 35%. We were very pleased to see that we signed contracts in this project in the current market environment, confirming also that it's a project which has strong interest amongst the targeted tenants. As we have communicated from the very beginning, this project is targeting smaller tenants within the technology sector. And they typically decide -- make decisions on moving 6 to 12 months ahead of completion, which is why we have also communicated that occupancy is expected only to pick up from now and forward. One of the tenants here was the University -- Oslo Metropolitan University, which is the academic leg, which will be going into this hub of knowledge sharing for technology, so also one important tenant to get in place there. We do also have several letting processes ongoing in our project at Universitetsgata 7-9. So we were comfortable with occupancy rate there of 52%, one year ahead of completion. Now a few words on the market situation. It's really difficult to have a firm opinion on where the market is going to go in this very uncertain time. We will try to share some of our reflections on what we feel in the marketplace right now. After a slowdown in March and April, the overall letting market started picking up in May. And when we came into June, we would say that we experienced more or less normal pulse and activity in the letting market. We've had a strong interest for our project pipeline in June. We've had several on-site visits and lots of processes ongoing. However, if you look at the signed leases this quarter, they are all based on processes which started prior to COVID-19. We do also observe that rent levels in our ongoing processes are holding up well. At the same time, we see that the market specialists are communicating strong uncertainty about the development going forward. Some analysts are predicting that rents will decline. However, that's mainly based on previous experiences from crises where we have seen that when the GDP declines, the rent levels tend to follow. However, they're also stating that this is a very uncertain situation as we've never seen such large stimulus packages coming into the economy as what we are seeing right now. And also we saw that we went into this situation with a very strong starting point with the vacancy levels in Oslo being only at 5% to 6% for the overall market. And if you go into the city center, vacancy levels even smaller at 3% to 4%. And there is very little new known supply coming into the market for the next 2 years. The -- in the city center, hardly any new supply coming in. And the majority of the unlet new supply will be coming in the fringe areas. What we have seen during previous crises is that tenants tend to postpone decisions on signing new contracts. So we do also now expect to see that some tenants will go for short-term prolongations. And we do believe that based on the current market environment and that the shortfalls we have seen in the market -- sorry, we will also see that the project pipeline will be postponed slightly because of these letting processes taking more time. A few words also on the observed office trends in the market. When we talk to our customers, what we experience now is that they are saying that it's actually worked quite well to do what we know how to do from the home office. At the same time, they're very clear that it's very difficult to start new initiatives without physical interaction, and the office market was already in a shift prior to this situation. And some of the trends we were preparing for ahead of COVID-19, we do see are now set to accelerate based on our recent experience. Firstly, flexibility, that is something which we talk about in 3 dimensions. Individual flexibility, we're all different people. We have different tasks. The way we perform our work efficiently is very different. There is no such thing as one suit fits all. Second, we have different life situations. If you take a newly graduate or a new employee, they would need to come into the office, sit next to a colleague, learn, learn the company culture and also be able to show their talent. If you talk to a family with toddlers, they would very much appreciate the opportunity and flexibility to work from home 1 to 2 days a week. And knowing that the cost of office is about 5% to 10% compared to the costs for salaries and social costs, providing that kind of individual flexibility has a very high payoff, both in respect of loyalty but also productivity. So that's definitely a trend which we expect to see accelerating going forward. Second dimension of flexibility is contractual flexibility where a world of uncertainty demands that you have the opportunity to both scale up and scale down, and also that the landlords having large clusters portfolio with assets within one cluster are better fit to provide that kind of flexibility. The third part of flexibility is about buildings flexibility. Here, the physical shape of the building is, of course, important, but also the technical grid in the building needs to be flexible. And if you look at Entra's portfolio, it has an average age of 7.2 years, meaning that it's been through complete renovation or new build within those years. So our portfolio is very modern and flexible and is well prepared to adapt for different workplace solutions. The second trend we expect to accelerate is digitization. We've all learned to interact and work digital. We've probably gained several years in this perspective. And there's also a dimension that technology will become more important in providing knowledge in respect of how to design the future workplace. We're currently working with 2 large customers, placing out sensors to provide them with a fact-based insight so that they have the data they need to design their future workplace. We also worked with a booking module, helping our customers to both keep track of social distancing and also in the case of infection, trace the infection. The third part of trends which we do see will accelerate now is the social dimension. We do definitely expect that people will work more from home after this experience we've had. And in spite of that or maybe even because of that, we will see that the role of the office will become even more important. We need to be able to meet people. We need to collaborate. We need to learn the company culture, which is why the office needs to be more a meeting place where the company culture and also identity is built. So the sum of this is that what we do expect to see is that companies will, to one extent, reduce maybe their requirements in respect of desks. We've already seen that when companies come out and ask for more space, new space. They typically plan for 60% to 80% [ simultaneity ] in respect of their desks, and that's going to continue. But then again, calling for more space is the fact that we need more space for collaboration, for meetings and for social arenas. So very dependent on the starting point of each company where this is expected to go. I think we're then ready to move on a bit more details on the financials. Anders, do you want to join me up here? Thank you.

[Anders Olstad, Deputy CEO & CFO]

Thank you. We all know that commercial real estate is a pretty -- not a slow-moving, but this is a long-term business. And with particularly so with Entra with sort of long WAULTs, predictable cash flows, high-quality tenants. So in this way, this quarter has been a very interesting one from a professional point of view. And particularly working with tenants, helping tenants that needs to be helped, negotiating terms, operating the assets in different way than we've done and also in terms of financing, so clearly a very interesting quarter for us, indeed. I'll focus the present -- the financial part on 3 topics: Firstly, the effect of COVID-19 in our numbers, which is give or take around NOK 15 million, 1-5, divided between NOK 5 million reduction in revenues and NOK 10 million in accrued costs -- sorry, for possible default of payments, so a total of NOK 15 million. Then we'll talk through the value changes and then partly a update on the financing situation and the interest rate. If we go to the revenues, we ended up at NOK 587 million, so basically flat from the previous quarter. And this is about NOK 6 million less than we expected. NOK 5 million of those comes from reduced revenues in terms of turnover-based rental income. As we spoke about in the last presentation for the first quarter, we have about NOK 60 million in annual revenues coming from turnover-based revenues at our tenants, particularly from parking, retail, F&B and co-working. So those NOK 15 million, or NOK 60 million for the year, NOK 15 million for the quarter, we have now -- we expect that NOK 5 million of those will be lost, i.e., the revenues for the second quarter is down by NOK 5 million. Compared to the second quarter last year, we're up $7 million, and let me just go through quickly the changes. Firstly, we acquired one asset in Bergen, which yields about NOK 7 million in revenues. We divested 2 assets in Oslo, which we basically taken out NOK 8 million in quarter earnings from our P&L. Then we put 4 projects into operations, the biggest ones being the university project in Oslo and the Powerhouse Brattrkaia, which all those 4 together yield another NOK 29 million in additional rental income for the quarter. But at the same time, we've taken out 4 projects -- 4 assets, not projects, 4 assets out of operations, 3 in Oslo, 1 in [ Toyen ]. That also basically has a net effect on our revenues by NOK 29 million. So basically both on the M&A side and the project side, it's a wash. We're ending up with the -- a low like-for-like growth this quarter. You will recall that for the first quarter, we had 2.3% like-for-like growth, i.e., 70 bps above the CPI of 1.6%. Basically, all our contracts are being basically adjusted by CPI each year. For this quarter, we ended up with a like-for-like growth of 0.7%, i.e., significantly below the CPI. That is due to the reduction in turnover-based revenues. If we put those sort of that lost revenue back, those NOK 5 million, we will end up with the like-for-like growth slightly north of the CPI. Net income from property management coming up at NOK 350 million, so we are NOK 7 million down from the first quarter, NOK 2 million down from the second quarter last year. The main reason for that is the increased costs that we have booked for the provisions for default from our tenants, i.e., NOK 11 million. That's been put on operating cost as a precaution for tenants coming into problems. There is a situation. We have bank guarantees in pretty much all our contracts. In those contracts we don't have bank guarantees, we have mother company guarantees. So we have the opportunity to go to the bank and saying, "Guys, we want our money." But at the same time, there is also a commercial sort of evaluation of the long-term relationship with the tenant. And it might be that we will work with the tenants and give some of those NOK 11 million to the tenants or basically take it off our balance sheet -- or take it off our P&L. So that means we have set off NOK 11 million in cost base this quarter. Profit before tax, remember last year, we had a 0 write-up in the investment properties, and we had a net negative on the financial liabilities of NOK 337 million in value changes. So the profit before tax in the first quarter ended up at NOK 58 million. For this quarter, we have back to NOK 940 million. I will come back into that later. If you can move into the cash earnings annualized 4 quarters rolling, we're as guided at NOK 8 per share, basically 13% CAGR since the IPO in 2014. On the net asset value coming at 156, this is after the repayment of dividends in May of NOK 2.40. If we look at the CAGR for the NAV and the triple-net, we are 13% for both. If we include that we paid out NOK 22.25 in dividends since 2014, the CAGR on the NAV and the triple-net is 17% and 16% respectively. Then you will note, we have added another term with the red dots in the chart to the right, which is basically the net reinstatement value. As we spoke briefly about in the last quarter, EPRA has introduced 3 new terms for how we shall present the value per share: the net reinstatement value, the net tangible assets and the net disposal value. The difference between the NRV and the NAV is for us basically the treatment of tax and the tax liability, a tax loss carryforward liability. And while we see that some or most of our Swedish peers basically have a more -- we have a more conservative view of taxes than our Swedish peers. So when we look at their numbers, their NRV and the NAV is pretty much similar. When we use a definition of NRV set by EPRA, NRV is give or take, NOK 5 per share higher than our NAV. We will gradually implement those 3 terms throughout the year, but for the sake of comparisons, we feel it's prudent to also keep the NAV and the triple-net as long as possible. In terms of the net asset -- the net tangible assets, there's also sort of a management valuation on how big a share of the portfolio is for sale and how big a share of the portfolio will be kept for eternity. And that will decide the tax treatment on the net tangible assets. We will come back to that one. On the net disposal value, it's basically a breakup value of the company. The term is not really well suited for the Norwegian market because all our assets are put in SPVs, so i.e., the tax effect a lot different from how EPRA basically has defined it. So we will need to work on EPRA on the net disposable value -- net disposal value. On the P&L, a couple of things I [ touch on ]. Firstly, the operating cost at NOK 65 million, driven primarily by again the provision for bad debt of NOK 11 million. You will see that the net of other revenues or the costs at NOK 6 million, basically our Entra services, additional services for the tenants and also income and cost from the -- some of our assets up at Drammen outside Oslo. Admin costs coming in at NOK 39 million, so clearly below both the first quarter and also the second quarter last year and also reflecting the reduced sort of external activity in the company, as we see in most other companies in -- from the second quarter. On the financing cost, it's down. I will come back into that later. We see that we have partially got the effect from the reduced interest rate during the quarter. Looking at our -- not guiding, but basically it's the summary of the known effect in the market on our revenues part. You will see that we made a few changes since last quarter, namely: one, we kept the reduced turnover-based revenues, sort of the drop of NOK 5 million. We basically kept that throughout the next 6 quarters. That is probably a bit conservative, but again we'll see how it goes, and then we'll update it accordingly as we go along. On the fourth quarter, we've taken down the revenues by NOK 2 million from a legal settlement that we made with the Norwegian state. I will come back into that on the next slide. And then we have, starting in the Q1 '21, taken down the expected CPI adjustment to 1.3%. We had 1.9% in our numbers previously. We took it down now to 1.3%. The CPI 8 is about 3% in Norway 12 months rolling now. But the energy prices are so low driven by a lot of snow in the mountains, and we've got hydro-based power, that the CPI that we use is now sort of extraordinary low. So we've taken that down as an effect from Q1 onwards. But -- and then we basically also see that the effect of the projects Universitetsgata 2 - Rebel and the Universitetsgata 7-9 will start to come towards the end of '21. And in here, we are basically -- we have taken the pre-let ratios. So as we will continue to rent more of those projects, the income will pick up. On the investment properties, starting off at 49.6. We invested NOK 156 million in the quarter, and one was a small asset in the [2 lean] quarter. Basically, a small add-on that we did in sort of low-yielding one, NOK 20-some million. And then I need to explain a bit about the legal settlement that we made. Please allow me just one minute to explain that one. We entered into, back in 2002, we entered into a contract with the Borgarting Appeal Court in Oslo for a 30-year contract with a 5 plus 5 year extension. And Borgarting moved into the premises in 2005, so it's like 15 years ago. In that contract, the Norwegian state had an option to acquire the asset at a predetermined price. The state used that option, or they requested to use that option a couple of years back, but they didn't get the funding from the parliament. And thus we said that, that option is void, no longer usable. And then they tried to use it again 2 years ago. We denied, took it to court. We lost the case in the first court, and the verdict was that the state had the right to purchase this asset from us at NOK 486 million. So basically from that point in time, we put the asset value of NOK 486 million in our books. Then we, a couple of -- 2 weeks ago, we made a settlement with the Norwegian state. Basically, we paid them NOK 132 million, which is part of the NOK 156 million in acquisitions that we see in the first part of this bridge. And we agreed to the NOK 2 million less revenues per quarter for the tenant, and the option was nullified. The effect on our books was that we wrote up the asset from NOK 486 million by NOK 181 million. And that is the greenish part of the pie to the very right. So we're very happy that we have annulled the contract. The option is nullified. We have a 15-year contract with a very happy public tenant in the center of Oslo with a 5 plus 5 year option. And they're already -- we're already discussing that option. So it's -- we're very happy with this settlement. Okay. We continued to invest in our property, NOK 411 million primarily from U 2 and U 7-9. We divested some smaller assets, basically parking in Stavanger for NOK 15 million. And then we had the increase in value changes on the properties of NOK 619 million. And I also need to elaborate a bit on that one because it's not fair -- it's not straightforward. In the first quarter as Sonja said, the appraisers provided their valuations with a value uplift of NOK 1.2 billion or NOK 1.168 billion to be exact. That was done pre-COVID-19. Given the uncertainty that we felt was in the marketplace, we thought it was prudent not to take those valuation into account. So we basically kept our values stable from Q4 into Q1, so no value change at all last quarter. Then the appraisers came back now for the second quarter. And what they did was normally an appraiser would sort of have a backward-looking view, saying they want an evidence-based way of evaluating an asset. So you need to see yields from comparable transactions and you need to see contracts made on rent levels from similar assets in that area. What the appraisers have done now is taking a view saying, they expect something will happen. Yields, particularly in the fringe areas, might move it upward, and market trends might come a bit down. And so basically what the appraisers have done is to say a bit front-running sort of expectation of future development. And as such, they took the values down from the first quarter to the second. But as the NOK 1.168 billion up in the first quarter, and then NOK 619 million up in the second quarter. So basically the net is -- the net-net-net, sorry, I'm -- the net of the first is NOK 619 million. So it's a different way of doing it, and we have accepted it. And -- but that's also important to say that there is no evidence in the market as of today that yields have dropped or that the market rents have come down. Anyway, of the NOK 619 million, which then is basically a combination of the value changes from Q1 and Q2, you see that NOK 219 million comes from increased market rent. That was a big driver also in the first quarter. Then we have NOK 181 million coming from the settlement regarding the asset that I spoke about earlier. And then we have NOK 98 million coming from a strong net letting for the first and second quarter. And interestingly, you see that the yield effect is pretty much 0, about -- it's NOK 4 million for the first half year. So it was a bit up in the first quarter, a bit down in the second quarter. So all in all, long explanation on a short number, but we're up then NOK 619 million for the -- as by the second quarter. And the appraisers have started to taking a possible effect of COVID-19 and the -- also the effect of the reduced oil price in Stavanger into account. Then some capital interest rate and then we -- then basically coming up at NOK 50.7 million. Adding also, we now have 52 million -- NOK 52 billion on the full portfolio. On the financing, it's been pretty much a business-as-usual quarter. We rolled another NOK 1.2 billion of commercial papers in 3 tranches. We have extended another NOK 1.5 billion in bank loans, RCFs. We have issued a new NOK 1.5 billion 7-year green bond. I'll come back to that. And we also have repurchased about NOK 293 million in short-term duration bonds. So active, but sort of business as usual. Our financing mix now is 72% market-based bonds and CPs, the rest in bank. Interesting to see, we continue to grow the green part -- the green funding part of our debt portfolio, so currently at 41%. That will continue to increase. Looking at the middle graph, the interest cover at 3.3, so well -- very good leeway to the -- any covenants, which basically are on 1.4. LTV at 40.6%, also a long way from the covenant at 75%, so very solid ship indeed. If you look at the interest rate, there's been massive changes over the quarter. If we did -- our typical financing will be a 5-year bond. If we did a 5-year bond in early March, i.e. pre-COVID-19, the NIBOR would be about 190, and the margin would be between 60 and 80, so all in all about 2.6% in marginal cost of debt. If we did that today, the NIBOR would be around 35 bps, and the margin on the 5-year bond will be about 95%, so it's about 1.3 in total. So our marginal cost of debt has pretty much been reduced by 50% over the last 3 months, which is substantial. And you can see that also in the graph to the right where now the average cost -- interest cost is 2.39. We don't get the full effect of those 1.3% down as parts of our debt is hedged. But if looking at sort of the situation pre-COVID-19 compared today, our net savings on the financial side is about NOK 100 million per quarter -- no sorry, NOK 100 million per year, i.e., NOK 25 million per quarter. Part of that was taken also in the second quarter. But as we do interest rate fixings on a 3-month basis, it takes a bit of time before those reduced interest is being rolled into our debt portfolio. Quickly on the market. Bank market. We keep our partnership with our 5 banks, in alphabetical order: DNB, Handelsbanken, Nordea, SEB and Swedbank. All 5 are open for business and we feel willing to really enable to meet our funding needs, so very happy with those partnerships. We do see that new bank funding has come up a bit in terms of pricing, reflecting the increased funding cost for the banks. The existing financing, the existing loans in place, we keep them at the existing margins, and we are happy with that. CP market, it still is a small but important part of our financing. Margins were -- came out to about -- we did the first one we did in early part of the quarter was about 74 bps margin. The last one we did now was at 29. So they're approaching sort of normalized levels, which would typically be in the 10 to 20 bps. All our CP financing is backstopped in bank. So again, small but important for us to keep the financing costs down. Then the bond market has seen some extraordinary positive development during the quarter. There's massive liquidity available. And we now see that pricing is coming down to pretty much normalized levels. I said sort of for us, normalized 5-year would be between 60 and 80 bps. We now do it at about 95. So again, I think we talked about resilient financing before. And we believe that this situation has really proven the value of sort of resilient financing, backing a capital-intensive industry like -- industry -- company and industry like ourselves. And we basically had NOK 7.6 billion available in cash and undrawn RCFs. So all our funding needs are well provided for. Last exhibit on the financing part, a bit more information on the bond we did some days ago. We decided to do a 7-year bond. It's a bit longer than our sort of sweet spot, 5 to 6 years. But our maturity profile is sort of really well-staggered up until 6 years. We had a sort of opening now for 7, so we decided to go for a 7-year bond. Very strong interest in the market. We did the pricing at 110 bps, which is 9 to 10 points below the bond curve, i.e., signaling both the strength of Entra as an issuer and also the importance of the greenish part of our financing. When we did the -- when we started our green bond program back in 2016, we got a second opinion from CICERO, which is independent affiliate of University of Oslo, providing a second opinion of Entra. And based on the quality of our assets, the greenness of our assets and the -- how Entra operates as a sustainable business, we got the sort of the dark shade of green second opinion, basically the best rating there is. We -- that was back in 2016. This spring, we started certification process also with CICERO in terms of certifying Entra as a green company basically from an equity point of view. And we received that last month. And again, scoring Entra very favorable, putting Entra solidly in the sphere of sort of a green investment alternative. And we were also the first company in Norway to receive this certification. So from the financing part, it's full steam ahead. Thank you.

[Sonja Horn, Chief Executive Officer]

Thank you, Anders. Okay. Some closing remarks.This has been yet another extraordinary quarter, but we have seen limited effect both on our operations and financial results. The outlook is, however, more uncertain going forward due to potential further effects of COVID-19 restrictions. We still don't know whether we will see a second wave and also the effects of the global economic downturn. But despite the COVID-19 lockdown and restriction, we have had a very solid second quarter. We have signed new leases. We've started 2 new refurbishment projects. And we also see that we have a strong letting pipeline. To sum it up, Entra is in a solid position. We have a portfolio of modern and flexible buildings with attractive locations. We have maintained a high occupancy rate over time, currently at 97.6%. And we have an average lease duration of 6.8 years and 58% of our rental income from public tenants. We have a strong liquidity and financial position, and we have a flexible and attractive project pipeline with also firm processes ongoing. So I think that sums it up for this quarter. And to my knowledge, we don't have any questions. So thank you very much, and we will see you again next quarter. Enjoy the summer in between. Bye.