Gecina SA

PAR:GFC

Earnings Call Transcript 2021-Q3

[Operator]

Good day, and welcome to Gecina Q3 2021 Activity Conference. Today's conference is being recorded. At this time, I would like to turn the conference over to Gecina. Please go ahead.

[Samuel Henry-Diesbach;Director of Financial Communications and IR]

Thank you. Hello to everyone. Thank you to all of you for being with us online for this conference call related to our business activity in Q3 2021. I'm Samuel Henry-Diesbach. I'm here with Méka Brunel, CEO; and Nicolas Dutreuil, Deputy CEO in Charge of Finance. After a quick introduction by Méka regarding our performance in Q3 2021, Méka, Nicolas and I will be very happy to answer any question you may have.And I now hand the floor to Méka.

[Mahkameh Brunel, CEO & Director]

Thank you, Samuel. Good morning, everyone. It's a pleasure to hold this conference with you today. As you probably may have seen in the press release we have published yesterday evening, our performance has been particularly good and sustainable this year again, bringing, therefore, confidence for the semesters ahead.Facing the COVID crisis we met along in '20 and still couple of influences in the first half of this year, Gecina's performance had proven its resilience to go through the crisis. And this has reinforced further our conviction regarding our strategic position. Today, in a context showing significant improvement on the macroeconomic side and also on real estate markets, we now see the drivers of the performance ahead as visibility is regularly improving.Of course, the improvement in visibility is linked to the macroeconomic outlook, which is going better and better in France. You may know that the expected GDP growth for this year is around 6.3%. And France has reported, this morning, plus 3% for the third quarter this year. And the return to pre-crisis unemployment levels even below that level is absolutely outstanding. This robust development is reinforced by strong progress with vaccination rate in France, 86% of the population is now vaccinated over the age of 12, ensuring confidence in the pace of the economy recovery.Enhanced visibility is also supported by the upturn in rental transaction. Take-up is up by 32% for the whole Paris region. With this trend particularly strong in Paris' Central Business District, plus 76%, where the volume of transactions is already back up to its long-term average while the level of availability supply within 1 year is below its 10-year average.At the heart of Paris City, the market shows that the vacancy rate has stabilized or already started to decrease in the last few months, combined with an increase in prime rents, plus 3% since the start of the year according to Cushman & Wakefield. A positive trend in Paris CBD where the vacancy rate was already trending down in the third quarter, minus 4 bps to 4.1%, although this still contrasts with more peripheral areas, illustrating the polarization phenomenon driving real estate market and supporting Gecina's preferred sectors.This brings a significant improvement in visibility for 2022 and 2023 at the heart of Paris and in Neuilly-sur-Seine, representing 73% of our portfolio with encouraging although mixed signs for the rest of the Western Crescent, 21% of our portfolio. And we must -- I must say, continued questions surrounding the secondary sector only slightly more than 3%.Gecina's operational performance in this context have been relatively strong since take-up recovered in Q2 this year, with more than 150,000 square meters let since the start of the year. This is 70% above the transactions achieved by the group one year ago and 32% versus September 2019, so before the COVID crisis. A rather solid performance that's confirmed also with an average reversion capture year-to-date of around 20% in CBD, and plus 4% in the total portfolio.Now it leads us to an improving visibility for 2022 and 2023. The office real estate markets are thus showing clear signs of a recovery, especially in central sectors in terms of both rental transaction volumes and rental values. The current upturn in inflation is also supporting positive outlook for indexation in 2022 and 2023, benefiting the group's rental prospects. The full benefits of these current trend will gradually become visible with the group's reporting over the coming half year period, with the figures at end September still primarily reflecting the market trends observed over the last couple of years, especially the last 12 months.As confirming these trends, we can expect to progressively materialize along 2022 and 2023. We can see positive signs on the occupancy side, amongst others, spot occupancy rate for offices moving upwards in Q3 for the first time since the COVID crisis, reflecting the upturn in the most central sectors, a spot occupancy ratio for student housing back to almost normalized levels at around 91% at the end of September.Post-2021, visibility improves and growth is expected to gradually pick up along '22 and '23, supported by the acceleration of leasing, the upturn in indexation, the rental reversion continuing to be captured, especially in central sector as well as the contribution of the buildings delivered recently or scheduled for delivery from the pipeline.In that extent, note that 33,000 square meters of office will be delivered mid-'22 in the CBD already let by -- at 87%. The pace of this expected upturn in the group's result over '22 and '23, of course, will be linked to the upturn in indexation and the speed in leasing of currently vacant spaces, which is what we are seeing in the market with the support of the organization and the quality of our teams and of course the quality of our portfolio where it is located.Regarding our performance expected in 2021, recurring net income is still expected to be at EUR 5.3 per share despite the EUR 541 million of sales secured in 2021. The group's performance levels since the start of the year have been more solid than expected, particularly -- from the analysts, by the way -- particularly concerning operational aspects and specifically office leasing in central sectors in terms of both volumes and prices as well as financial aspects with a reduction in the average cost of debt and the extension of its maturity. These achievements have further strengthened Gecina's confidence concerning its expected performance for 2021.As a result, while the group has secured or finalized EUR 441 million (sic) [ EUR 541 million ] of sales since the start of the year with, as a reminder, 8.5% premium over appraisals value. The solid performance in '21 make it possible to maintain expectation for recurrent net income of EUR 5.3 a share, while the initial forecast excluded the impact of potential sales or acquisitions.For reference, recurrent net income group share per share, excluding the impact of sales completed during the year, would have been between EUR 4.4 -- EUR 5.4 to EUR 5.45. It is plus 2% to plus 3% higher than the group's initial guidance as announced in February, illustrating Gecina's robust operational performance over the year and also the quality of the strategy by focusing on the best areas and most central areas are assets and running the needed CapEx on them over time.Nicolas, Samuel and myself are now available to answer the questions you may have.

[Operator]

[Operator Instructions] We will be our first question from Christopher Fremantle from Morgan Stanley.

[Christopher Richard Fremantle, Executive Director]

I had a couple of detailed questions and then a more general one. The detailed questions were, first, the disposals. Can you remind us what the overall rental yield is from the disposals that you have made this year, please, just a rough number, please, so we can tell whether it is below or above your existing portfolio?The second one is you're often very clear about how much your development pipeline can grow your rent. Can you just let us know how much rent you are likely to lose in 2022 from assets that go into your pipeline as leases expire, how significant that number is, please? So those are the 2 detailed questions.And then the general question is perhaps more for, Méka. If you stand back, do you think the market or your strategy needs to change at all as a result of what's happened as a result of the pandemic? Or is it your view the pandemic is going to end up as almost an aberration and your business in the market just goes back to normal? Because it sounds as though from what you're saying, the answer is more the latter, that you're bouncing back very quickly. Any -- if you can just provide your latest thoughts on this, please?

[Mahkameh Brunel, CEO & Director]

Yes. Thank you, Christopher. I will start to answer one of your detailed questions and probably hand over to Samuel to the second one. But on a general point of view, I will also answer before Samuel is giving you some thought. On the disposal of our rent, I think that we are between 3% to 4%, which is -- actually -- but in secondary areas. Whereas our values based on valuation on the best areas, we are around 4%. So we are improving the quality of our portfolio at the same time as we are disposing.On the general cut, I think that the trends we mentioned 4, 5 years ago, which we consider that these trends were absolutely global regardless of what's going to happen, I remind you of these 3 mega trends: one being centrality and [mixity-of use] around hubs of public transportation. The second being digitization, which is going to destroy admin jobs, the benefits of servicing jobs and value-added jobs. And the third one is climate change.These trends have been strengthened after the crisis. And what we are seeing is exactly what we have mentioned before. By the way, these were our doubts and our vision at that time. And the history and what happened globally is giving us -- giving us the kind of validation of what we put forward. What we are seeing in the market, by the way – and when I'm talking about the most central areas -- the latest signature we made in La Défense, people called me for the competition on this basis. And they called me and they said, "We would like to go to La Défense because we don't want to be, A, in the first ring of Paris, and I said -- in the secondary areas of Paris. And I say, where are you located today? And they mentioned a city which is absolutely at the other side of the prefect. So it's not considered as secondary areas.But not good [dessert] in terms of public transportation, not good area, not a good environment and not quality of assets, and they prefer to move to La Défense to be in a much more active areas, so they have access to a potential market of clients and also to be capable to hire good people because there are also universities around there. So I think that this movement is real, and this is what people and corporates are fighting for. Samuel, how much rent we're going to use, you have this better than anybody else?

[Samuel Henry-Diesbach;Director of Financial Communications and IR]

Christopher, yes, regarding the pipeline, you -- we regularly disclose some figures that helps you to update your model every half year. If you take the -- the slide show on Page 65 from H1, you find out that on our annualized rent base, we say that there are EUR 21 million of rents, which are coming from assets, which are set to be transferred ahead to the pipeline. Some issue have been transferred already, but you can assume this EUR 21 million to be positively unplugged from mid-2021 until possibly during the '18 following months, more or less.So it means that this is the way you can monitor probably the written off rent and plugged from a rental basis. Of course, we should calendarize it. But that's the volume effect of rents that you should expect to be unplugged so to be able to transfer these assets offering value creation opportunities into our pipelines ahead. So hope it might help. And once again, these kind of things, you feel free to call me at any time you want. So we can check your assumptions.

[Mahkameh Brunel, CEO & Director]

Next, I think we have...

[Operator]

We'll take the next question from Florent Laroche-Joubert from ODDO BHF.

[Florent Laroche-Joubert]

So I would have maybe 2 questions. So would it be possible to have an update on the leasing of assets that were present or are present in the pipeline and to be delivered in 2021 and 2022?And second question, maybe: would it be possible to have an update on maybe the dynamic you have today on your partnership with Nexity and Woodeum? So should we expect any new project in the near future?

[Mahkameh Brunel, CEO & Director]

Yes. Thank you. Samuel, on the pipeline?

[Samuel Henry-Diesbach;Director of Financial Communications and IR]

Yes. Thank you, Florent. So you can see that amongst the operation which are set to be delivered in 2021 and 2022, you have some few about around 17, 1-7, operation, which are in the whole pipeline in total. When you look at the operation to be delivered on the office side -- because there is no question for the resi, as you can imagine -- so yes, Paris Biopark, Paris Biopark is fully let already and has been delivered freshly. So it's fully let. So that's an asset, which is inside the city of Paris.For Paris Live, as you know, that's now almost 90% office spaces, which are fully let at this stage. And then there are 2 other assets, which are La Défense Sunside and [indiscernible] different profile, but we are extremely confident in terms of pricing and positioning of these 2 assets on the location where they are.For La Défense Sunside, it's well live process. But you know as well that La Défense is having a lot of supply these days. That said, it's only a question of time, not a question of price, not a question of quality. The asset is very well positioned in its market. And as an example, we have exactly in the same location showing that when you have a decent supply in this location, you can be successful, but we have an asset [that was so far back on] next door to Sunside, which is Adamas. And you've seen maybe a few days ago that we have published a press release that said that we have achieved nice lettings on the asset also Adamas, and that's proof of the kind of appetite market kind of have for this asset in types of [ application ].Neuilly. Neuilly's assets at Charles de Gaulle is clearly one of the prime assets of this area. That's as well something we can be relatively confident considering the asset. That said, it's a question. It's still not cleared at this stage. But if I understood correctly, but maybe, Méka, can have some comments on that, they are -- hello?

[Mahkameh Brunel, CEO & Director]

Hello?

[Florent Laroche-Joubert]

Yes. Yes. We can hear you. Hello? Gecina, we can hear you. I can hear you. I can hear you.

[Samuel Henry-Diesbach;Director of Financial Communications and IR]

Okay. Sorry. We felt we'd been disconnected, but apparently, you can hear us. So for Neuilly, clearly, we can be confident there are many visits, many prospects. But maybe, Méka, you want to comment a bit more about this specific asset.

[Mahkameh Brunel, CEO & Director]

Thank you. Florent, do you hear us?

[Florent Laroche-Joubert]

Yes, yes, I can hear you. Yes. I can hear you.

[Operator]

This is the operator speaking. Ladies and gentlemen, please stay on the line while we reconnect.[Technical Difficulty]

[Mahkameh Brunel, CEO & Director]

Florent, do You hear us? Florent? Okay. I'm sorry, we had a technical issue. So I was mentioning that since the beginning of the year, we have already secured almost 1,200 lots by buying from different developers, including Nexity and extension and redevelopment of our own site. But to your specific question on partnership specifically, we had some -- in France had some issue to launch new programs since last year. Now we have already 200 lots, which have been secured with Woodeum and Nexity, and we are working on a couple of new programs, which are going to be done in the couple of -- in the next month.So we're going to give you more color on that on our year-end results. But the team seems confident in our capacity to launch new redevelopment. Of course, it takes longer than what we expected, but it seems that it works so far. And we have -- by the way, we have weekly meetings with both Nexity and Woodeum to just screen what is on the market and look at them and try to make these programs valuable. I hope -- I don't hear you. I hope that you heard the answer.

[Florent Laroche-Joubert]

I can you hear you.

[Mahkameh Brunel, CEO & Director]

No problem. Sorry for the technical issue. Excellent. Have a good day.

[Operator]

We will take the next question from Véronique Meertens from Kempen.

[Véronique Meertens;Kempen & Co;Equity Analyst]

Maybe one last question from my side. So over last few years, we have seen that because of the asset rotation program and assets being transferred to the development pipeline, that had a bit of a pressing effect on the earnings per share. You're guiding now for an upward trend in earnings per share, but how does that take into account the asset rotation program and CapEx program? Can we see -- are you expecting similar numbers? Or can you maybe elaborate a bit on that?

[Mahkameh Brunel, CEO & Director]

Look, on the disposition side -- I think your question is on the disposition side, like what is the volume expected in the coming period? Can I express that this way?

[Véronique Meertens;Kempen & Co;Equity Analyst]

More saying like you're guiding for an upward trend in earnings per share, but does that take into account similar disposals or similar amounts of assets being transferred to the development pipeline?

[Mahkameh Brunel, CEO & Director]

Yes. I think if I may, let's look back. We have done, again, based on our strategy -- which I expressed, which I re-explained, thanks to Christopher question earlier this morning -- we have refocused and centralized our assets as much as possible. By the way, we were kind of pioneer at a time we did that, but now we are followed by many other people. And this is not because they are following us. It is because this is the requirements of our tenants. This is what they are asking for: centrality, quality, standards, services. And this is all about that.Now what we have done so far, and I would just remind you that our strategy is based on the total return. So the disposition is much more on nonstrategic assets. Now we have so far in these past years, regardless of what we have done when we acquired Eurosic, we have disposed around EUR 1 billion, more or less, each year. This year, we are at EUR 500 million, which means that it is much more about the remaining and the refocusing on our annual asset review, which gives us the chance to do that. But we have done a huge amount of job to refocus the assets, to reconcentrate them in the best areas.At the same time also, the reason we -- for some assets, we have decided to put them in the pipeline, it's because we consider that the location were good, that there were good capacity in this building to be repositioned, and this was worth to do that in the -- in these -- in the pipeline. So I think that in the last past years, we have achieved several targets, which, today, we believe that we're at the right place. We have rationalized our portfolio exposure. As I said, the weight of Paris now represent 2/3 of our portfolio.If we include Neuilly, which is an extension of Paris, I don't believe that the Mayor would appreciate that, but as a reality, it is. We are all above 73%. As a comparison, in 2015, we were slightly above 50% in those same areas. So we increased our exposure by 50%. Our LTV is in line which -- with what we can consider comfortable levels at around 32%, including duties. If you were to exclude duties, we will be at 35%. And as of to say, today, I will say that we have reached a couple of goals regarding our balance sheet and our portfolio exposure.So as a consequence, we are in a situation of being [indiscernible] seller less than ever and because the job has been largely done already these past years. I'm not saying that we will never sell, but this is no more an obligation of any kind because we have restructured it up. So we're going to be opportunistic in the future considering disposals and only if we are facing unbeatable opportunities also to capture capital gain.But globally speaking, we are refocused where we have to be, and we are completely improving the quality of our asset. In -- by the way, talking about the improvement of the quality of our assets, we should also talk about ESG. The environment standards have largely improved. You know that more than 80% of Gecina's portfolio is labeled and you have certification, which is 4x more than the average in the market. So this is completely going to the right direction.

[Nicolas Dutreuil]

And clearly, when you look at the buildings that we have sold during the last years and the location of these assets, like [indiscernible], Gennevilliers [indiscernible], for sure, we consider that in terms of potential value creation or even in terms of resiliency of the portfolio, we are in a much better position than we were previously.So when we talk about growth on the earnings, of course, we are already including -- already linked to the development pipeline because that's something that we have clearly visibility on, so we can anticipate and forecast. So that's something which is already taken into consideration when we say that our earnings per share will grow in the future. On disposals, as Méka said, of course, our approach will be much more opportunistic than it was in the past.

[Operator]

Yes, we will take the next question from Pierre Clouard from Kepler.

[Pierre-Emmanuel Clouard]

I have just one question for you. Can you give us an update on the selection process for the next CEO? And at the present time, is an internal appointment preferred or not?

[Mahkameh Brunel, CEO & Director]

Well, very good question. I know that, Pierre, you are always very concerned about succession plan in our company in particular. I think the process is moving forward, and there are couple of direction, which are taken by the Nomination Committee. As you can imagine, the -- what the Nomination Committee is doing is confidential, and they are doing it in the most professional way. But so far, so good and all the different options are on the table and are considered very professionally.So I cannot tell you more about that because I'm not a member of the Nomination Committee either. But if you're concern is, is the company still under a leadership and working hard, I will let my colleagues give you a hint of what's going on, on a day-to-day basis. In other words, they cannot get rid of me on every day at the office every single day, and it makes them laugh actually.

[Operator]

We will take next question from Marc Mozzi from Bank of America.

[Marc Louis Baptiste Mozzi, MD & Head of the EMEA Real Estate team]

I'd like to make sure I understood correctly your strategy, Méka. If I understand you correctly guys, your capital recycling strategy, it's about EUR 500 million, EUR 1 billion disposal per year, while in the meantime, you're investing EUR 500 million of CapEx every year. That's the way I should understand the big picture from your perspective?

[Mahkameh Brunel, CEO & Director]

I don't believe that we are investing EUR 500 million a year. This is not correct. Maybe, Samuel, you can give more details on how the pipeline structure and...

[Samuel Henry-Diesbach;Director of Financial Communications and IR]

Yes. In terms of CapEx we injected in the pipeline, globally, if you take the picture by the end of June 2021, on a total of committed pipeline -- for a total investment cost of around EUR 1.8 billion, they were around a bit less than EUR 600 million of CapEx still to be injected, and that's something which needs to be spread from mid-2021 to the end of 2024.That's fair to say as well that, globally, you can expect that most of the assets, which we do have in our pipeline, that's assets which are located in the core Paris City, in the heart of Paris City, and that's redevelopment schemes. So it means that most of the total investment cost is made by the value of the lands or value to initial [ walls ].And so when you compare to the total investment cost, the additional CapEx which is not that massive. And that's one of the virtues of being located in the heart of Paris. Globally, if you want to build up simple model, it means that CapEx injection into the pipeline plus [indiscernible] CapEx, you can assume more or less this year, something around EUR 300 million a year. And that's a path that you can expect for the years ahead.

[Marc Louis Baptiste Mozzi, MD & Head of the EMEA Real Estate team]

Okay. Then the related question to that is, how much do you think your portfolio is already fitted for your decarbonization targets for being properly [laddered] for being properly responding to the future of occupier demand? That would be the question. Because you mentioned that it's full time more [laddered] more than the market. But if you take into account everything of your strategy, which is decarbonization, adapting the offer to the tenant demand. How much of your overall portfolio do you think it's already properly ticking all those 3 boxes?

[Mahkameh Brunel, CEO & Director]

This is a good question. Actually, on decarbonizing and improving the quality of our assets, as I said, we are -- the certification of our portfolio is 4x what we see in the market, but decarbonizing is going beyond that. As you know, that we have launched a program named CANOP-2030, which is about decarbonizing our existing portfolio with the client. Most of the time, people are doing the works, the CapEx, injecting the CapEx when they are -- when the building is vacated.Now we are putting most pressure on the existing portfolio, even with tenant in side. By the way, we are pushed on that side by regulations and by laws and by the pressure of European Union and of course, every single national laws. So there is no chance for anybody in the market to escape from that, but we are ahead of everybody else. I believe that Gecina has by far a real leadership in that side. And the reality is that the way we have structured our positioning and the need for CapEx is, we are doing kind of circular economy and readdressing what is needed in terms of CapEx rather than being about decoration and design and whatever, is much more driven and targeted to cheaper economy and to environmental aspects and, of course, decarbonizing is part of it.When we are talking about what is needed also in our existing portfolio is much more about energy, and the way we are negotiating the mixed energy we are injecting in our buildings. You know that real estate is a fragmented business. But in our case, as we are a large portfolio, we are dealing globally with energy providers. And as of today, we have several companies we are talking to, to make sure that the part of energy they are providing us is decarbonized and it's going to be part of the calculation.Now exactly telling you what is going to happen -- that taxonomy is under discussion at European Union. And all the specifications and the dedicated specifications are still under definition, not yet 100% done. And so we are expecting that in the next couple of months probably we are going to give you much more details hopefully, if we have the numbers coming also -- and the rules, by the way, and the rules by the year-end results. But today, as much as Gecina is concerned, we are much ahead of everybody else in our capacity to transform our portfolio.And look, are we going to 100% adapt our own portfolio? I don't know. But what I do know is if you are doing nothing, it won't happen. And tomorrow, we are not going to be able to lease whether our offices or retail or our apartments. So -- and that's the reason that the leadership, which has been shown by Gecina is absolutely -- I must say I'm proud of what my colleagues are doing on a day-to-day business is outstanding and ahead of everybody else. Considering that we are talking about the portfolio, our capacity to have a leverage on our service provider and not being only under the pressure of single and one-off discussion with different people. Does that sound acceptable to you?

[Marc Louis Baptiste Mozzi, MD & Head of the EMEA Real Estate team]

I just wanted to know a number, meaning, I just wanted to know currently what is the percentage of the market, which is already properly [laddered] just if we use the level as a metric?

[Mahkameh Brunel, CEO & Director]

You can see it in our half-year presentation, you have Page 38, a chart which shows what is the carbon emission, market versus Gecina, and see where we are compared to our peers. We're going to -- Samuel, can you please begin. So -- yes, go ahead.

[Samuel Henry-Diesbach;Director of Financial Communications and IR]

Yes. Marc, what you can find here is that in terms of CO2 emission, we have started to do the job much earlier than most of the players in the market. And consequently, it means that our carbon emission already minus 60%, 6-0, since 2008. For the market on the same type of period, that's not minus 60%. That's more minus 15%, 1-5. So you see and that's -- it suggests clearly that we are performing the best and that we are quite well positioned in relative terms.It doesn't mean that we have nothing to do left, but it means that we have started the job a few years earlier than the rest of the market. And the other indicator, which is interesting, I believe, is that we have 80%, 8-0, of our office portfolio, which is certified as HQE, BREEAM, which are having dual certification. If you compare to the market, that's -- we have figures on that for the benchmark. That's only 11% instead of 80%. So that's another sign that show you how we can position ourselves in relative terms to the market.

[Operator]

We'll take your next question from Marcus Phayre-Mudge from BMO.

[Marcus Andrew Phayre-Mudge]

Usual question, I'm afraid, for me. Obviously, things are clearly showing some early signs of improvement. But your -- the strategy does continue to degear, which we appreciate. Disposals are greater than CapEx, but that's okay. At the same time, the stock is trading at a 30% discount to asset value. There's money, free money lying around courtesy of the stock market, and I'd like the Board's latest view on buybacks, please?

[Mahkameh Brunel, CEO & Director]

Yes. Thank you for this question. Look, of course, the share buyback just based on numbers you mentioned with the discount we have to NAV, which is not comprehensive for most of us by minus 30%, could make sense. And by the way, that we are not opposed to this. You know that I'm not opposed to this because I've done -- we have done that twice in 2017 and 2019. So this is not -- this is part of our toolbox. You know about that, and we are not opposed to that.That said, the question is about the level of LTV we can be comfortable with for the years ahead on a much more long-term period, willing not only to keep our balance sheet healthy, but also to keep it flexible enough for the financing of our pipeline ahead and potentially to grab attractive investment opportunities if there are -- if any, in the market, and I will go back to that. We still expect some investment opportunities to come ahead from investors not having the know-how, the capacity to operate complex transformation required ahead.Exactly what I said about what is required in terms of environmental decarbonation and the consequence in terms of taxonomy, many investors have bought portfolio without having the expertise within the company and/or their asset manager to do those [ carbon emission ]. So numerous assets in core locations are turning obsolete. And therefore, they will offer attractive potential for value creation with attractive IRR.By the way, we have done that before. You should keep in mind that we did it with Rue de Madrid, Ibox, Mondo, Boétie, they are delivering unlevered IRR on a long-term period between 7% to 11%. And such investment opportunities would be preferred to [ABB], and I know that our investment team are looking at some off-market investment of that kind today. And hopefully, we'll come back with good news on that side too.Having said so though, the question is raised at each Board of Directors. You can trust us and discuss every quarter with our Board members. This is not impossible. But it's not considered as scenario #1. But again, we are putting that on the table. And if needed, we can have also exceptional Board meeting for that. Today, we believe that we can seize opportunities and grab them into market in the coming periods. So fingers crossed.

[Marcus Andrew Phayre-Mudge]

Okay. I look forward to discussing with the future management team that they feel that they're capable of producing instantaneous value gains -- mathematical value gains that are a buyback of -- and cancellation of equity at a 30% discount can be achieved buying knackered buildings from people who don't know what they're doing to make them environmentally friendly.I look forward to that fascinating discussion in the future because it's -- I've never seen it before, but look forward to listening to the magicians. Thank you, Méka. I mean, obviously, clearly, I'm frustrated by the same sort of wishy-washy response. And it's disappointing that the Board are not really focused on shareholders' interest, but we'll leave it there. And good to hear that things are improving, and thank you very much for the update.

[Mahkameh Brunel, CEO & Director]

Thanks to you. I'm really sorry that I cannot please your expectations. I knew that, but hopefully, you're going to be happy with the share price in the coming period and with the good news ahead of us. Have a good weekend. Thank you.

[Operator]

It appears that there are no further questions at this time. Méka, I would like to turn the conference back to you for any additional closing remarks.

[Mahkameh Brunel, CEO & Director]

Thank you very much. Please feel free if there is extended questions or you want to have more details. Samuel, Nicolas and myself are 100% available to answer all your questions. Of course, Samuel, with his team, Stéphane, and the rest of the team, but do not hesitate to also reach out to Nicolas or myself. Have a good weekend, and talk to you soon, and I hope that you will enjoy the coming period. Take care. Bye.

[Samuel Henry-Diesbach;Director of Financial Communications and IR]

Bye.

[Operator]

This concludes today's call. Thank you for your participation. You may now disconnect.