Klepierre SA

PAR:LI

Earnings Call Transcript 2022-Q1

[Operator]

Hello and welcome to the Klépierre First Half 2022 Earnings Presentation. Please note, this conference is being recorded and for the duration of the call, your lines will be on listen-only. However, you will have the opportunity to ask questions at the end of the presentation. [Operator Instructions]

I will now hand you over to your host, Jean-March Jestin, Chairman of the Executive Board and Stephane Tortajada, Chief Financial Officer, Member of the Executive Board, to begin today’s conference. Thank you.

[Jean-March Jestin, Chairman of the Executive Board]

Thank you for joining us this morning. I'm pleased to present Klépierre half year 2022 earnings. We had a productive and successful semester. We recorded strong operational reserves and generated €428 million on net current cash flow. This is €1.32 per share, 84% increase compared to 2021. This half-year has demonstrated the strength of our business model based on strong cash flow generation, limited cost base and a clear focus on high cash returns to our shareholders.

Coming off two difficult years marked with multiple store closures and various trading restrictions for our retailers, our results are a testament to the quality of our portfolio, our strategy, and our teams. Despite the challenging global environment, our clients have seen their business drastically improve in the last 12 months with a strong momentum in the last quarter. Retailer sales and footfall confirms a positive trajectory already observed during the second half of 2021.

And let’s remind ourselves that January 2022 was still impacted by the pandemic and notably the lockdown in the Netherlands, the 2G law in Germany and mandatory face covering to visit stores in the other countries. But from February to June, the trend improved month after month with a sequential acceleration in the second quarter. Our retailers posting sales above ‘19 levels and footfall being at the highest since 2020 at circa 90% in May and June, a 10 percentage points better than in second half of 2020.

This performance had been evenly distributed in all the regions where we operate as well as among all the segments. Nevertheless, the pace has been especially firm in Scandinavia and in the Netherlands, which outpaced pre-pandemic levels. Fashion also posted an impressive rebound reaching 102% of ‘19 levels in this second quarter while Household Equipment has continued to outperform. Food and Beverage is also about to close the gap with sales at 96% of ‘19 levels in the second quarter.

On the leasing side, demand for our space has been strong. We signed 700 leases, including 516 renewals and relettings, which is in line with pre-COVID levels. Reversion uplift stood at 2.7% on average, with Iberia and Italy at remarkable 8.2% and 5.7% respectively. Strong retailer demand, proactive asset management initiative and steady leasing activity led us to bring occupancy up 50 basis points year-on-year at 94.7%. This translated into an occupancy cost ratio of 12.4%, 20 basis points below the level of December 2021.

Among others, we signed multiple with leading brands in all segments such as Inditex, Primark, Calzedonia, H&M, Nike, Adidas, JD Sports or Sephora, but also with innovative retailers like Jimmy Fairly, Miniso or AliExpress. Value retailers like Normal, Pepco or Half Price also choose Klépierre to pursue their development.

We were also pleased to accelerate our marketing and loyalty efforts to reengage with our customers through online and offline campaigns. We launched a new loyalty program in more than 30 malls across Europe now gathering more than 130,000 new members.

Social medias, one of our strategic milestone to increase brand awareness has been accelerated. As of today, we got more than 5 million followers on Facebook and Instagram, an increase of 24% compared to 2021, and we plan 25 malls to be active on TikTok by year end. Consequently, on the back of higher footfall, and increasing sales, our variable revenues generated by parking, specialty leasing and sale-based rent fell by 77% compared to 2021.

Before turning to development and balance sheet, I would like to highlight that we pursue deploying our ACT FOR GOOD, CSR strategy. Daily our teams work to make shopping centers more environmentally and socially responsible. As such, our global leadership in sustainability is widely recognized internationally, especially by GRESB, CDP, MSCI or SBTi that attribute higher scored and ranking to thinking to Klépierre.

Since February 2022, we have been deeply committed in providing support to Ukrainians and refugees. Our teams promptly organized clothing, food and health care products collection from retailers, visitors and association in all our malls in Europe. All items, thousands of packages were shipped to Sadyba Best Mall in Warsaw, which became a logistic hub to transfer these donations to Ukraine.

Additionally, in the context of tension on energy supply and increasing related cost, Klépierre is also committed to further reduce its energy consumption. As a reminder, we have reduced our energy consumption by 45% and our carbon emission intensity by 84% since 2013.

Turning to development, we are highly selective on capital expenditures, as you know, focusing only in accretive projects with a clear target to limit the cash out for Klépierre. The major highlight is a successful opening of Gran Reno extension in Bologna early July, which is a final step of a full makeover. It was 98% let at opening and deliver a 7.6% yield on cost, far above initial target.

This flagship mall display 145 stores with an outstanding set of retailers such as all Inditex brands, Primark, H&M, Sephora, New Balance, Tommy Hilfiger, JD Sports and as such I invite you to watch the movie available on our website which showcase our first customer enjoying this new place of shopping last Saturday. The group also deliver four new Primark megastores in France and Italy and in total; Klépierre will have developed six new Primark by end of 2023 for 36,000 square meters.

Now turning to the balance sheet, we have been very active since January 2022. We have closed or signed for the €470 million of disposals with a net initial yield of 6%, which is 0.4% below book value as at December last year. This is a further step in our asset rotation strategy. Over the last 18 months, we managed to close transactions for a total amount of €1.3 billion and deals were made at an average yield of 5.6% near or at appraised value.

Pro forma the disposals made in July, this translated into a sizable decrease in net debt with solid financing metrics, such as net debt-to-EBITDA the of 8.6 time and interest coverage ratio of 10 times. Our loan-to-value ratio reached 38.8%, stable compared to 2021 year end. On top of a 6.5 year average debt maturity and a 1.1% cost of funding, the hedging profile remain solid with 88% of net debt hedged this year. The liquidity position stands at €2.3 billion after €400 million of debt repayments in the beginning of the year. And as a consequence, S&P confirm our BBB+ rating with a stable outlook in May.

We have also paid in cash this year €1.7 per share dividend which is 78% of the 2021 net current cash flow per share. We therefore deploy your financial strategy for 2022 based on a combination of assets rotation, deleveraging best-in-class cash distribution to our shareholders in order to make Klépierre the most resilient platform to face the coming challenges of retailer real estate in Europe.

A solid set of results coupled with the ongoing positive operational trend, lead us to revise upwards our net current cash flow guidance of at least €2.45 per share, a 5.4% increase compared to the midpoint of our initial guidance. And let’s assume that operations are not impacted in H2 2022 by any new COVID-related disruptions, or no major deterioration in the geopolitical situation. It does include disposal closed to-date and €0.12 profit per share booked in H1 2022 relating to higher rent collection for 2020 and 2021.

I would like to conclude by saying that since the outbreak of the pandemic, Klépierre was proud to service shareholders, paying €1.4 billion dividends in cash while reducing its net debt by over €1 billion. I think this proves the resilience of our business model and the dedication of our teams to deliver value.

And now we are happy to answer to your questions.

[Operator]

[Operator Instructions] Our first question comes from the line of Stéphane Afonso of Invest Securities.

[Stéphane Afonso, Invest Securities]

I have two questions on my side, if I may? So the first one on the rent, would it be possible to have an idea of like-for-like growth in H1without all the positive COVID effects? I mean by that the impact of indexation of occupancy and renovation? Also could you elaborate a bit more on the negative reversion rising trends? And finally regarding the current climate of pricing index rate? Do you intend to accelerate it also albeit more pressures on your committed and committed pipeline? Thank you.

[Jean-March Jestin, Chairman of the Executive Board]

Okay, thank you very much. So as you know, when - we do have an exercise to do a comparison between H1 2022 and H1 2021. And as you know our - in H1 2021, we had almost 2.5 months of store closures. So it's extremely difficult to do a real like-for-like, based on this fact. So unfortunately, we cannot answer specifically to your question, but I think if we look at the other KPIs, the occupancy has been stable at 94.7%. So we also signed a significant number of leases which as I said, proved the retailer demand for our malls. At the 2.7% reversion, indexation in 2022 is above 2.5% for the whole year of 2022. So, all in, and the rent collection as we indicated is targeted to be at 96.7% very precisely which is slightly 1.7% below the five year average before COVID. So I think the most of the KPIs show that the dynamic is positive, and next - second semester, we'll be probably able to give a fuller and clear like-for-like comparison between H2 2022 and H2 2021. So on the negative reversion in France, we don't really comment too much on a country-by-country basis. But we, so I think on the presentation, it's on Page 19. Yes. No, it’s on Page 10, sorry.

So, okay, so yeah, France is, yes, it's a market where we as you also can see, occupancy is a bit lagging compared to the others. So, clearly France is - it's almost neutral in terms of reversion. I have no specific comment on that. I will probably more highlight Italy, Scandinavia, Iberia and Netherlands, which are all positive. So all in, I think it's a good set of results. On interest rate, I think the first takeaway is that on the development pipeline, as you know, we are - we have been always extremely cautious of never launching a big number of development pipeline projects. So we are - we don't have a lot of CapEx committed for the next year. So we think we are protected. And for disposals, so we will continue our strategy to refocus our portfolio to the best set of assets. So, we expect to deliver further our transactions in the next 12 months.

[Stéphane Afonso, Invest Securities]

And maybe one last question. How are your average cost are really listed over the next three to four years?

[Jean-March Jestin, Chairman of the Executive Board]

You mean in 24 months?

[Stéphane Afonso, Invest Securities]

No, I mean three to four years.

[Jean-March Jestin, Chairman of the Executive Board]

We have, as you can - you can - if you refer to the - I would say the December 2021 full disclosure of Klépierre, you have the hedging profile. This has not changed. We are 88% hedged for 2022. And if we look at 2023, we are 84%. So, we are - we will have to manage the floating interest, but we are keen on that, but the level of hedging is very strong for 2022 and very - quite comparable for 2023.

[Stéphane Afonso, Invest Securities]

Okay.

[Operator]

The next question comes from the line of Rob Jones from BNP Paribas.

[Rob Jones, Exane BNP Paribas]

Yeah, good morning. Good set of results with [indiscernible] percent. One comment on Page 6, your retailer sales and footfall slide. Obviously strong H1, [indiscernible] month, June slightly down, retailer sales and to a lesser extent footfall, am I being too negative in extrapolating these negative movements through part for H2, or do you think you are still in the H2 be in a position where retail sales is roughly in line with 2019 levels and hopefully, say, 90% of 2019 levels?

[Jean-March Jestin, Chairman of the Executive Board]

Well that’s when it come to a projecting sales and footfall, I think once more, we are based on H1, even though we were in a very, I would say a challenging environment with the start of the Ukrainian invasion, sales have been extremely resilient. And footfall, I think it's a very good element. We were - when we, if you remember when we reopened in 2020 and 2021, we were almost at 85%, so, yeah, when we see a footfall of 80% even at the very beginning. So, footfall is very strong, and I think this will remain in place. When it comes to sales, I am, even though we are a bit cautious about the outlook for consumer spending in all Europe for the rest of the year, we - are most allocated in the strong catchment area and the average consumer profile and revenue per capita probably our customers are bit more protected against inflation. But so we are reasonably confident that the numbers will be strong but we will - we never do a projection on sales. July, when we have the feedback from the retailer that in our malls it's stronger, so we’ll report when we have the number, so we are reasonably optimistic about the resilience of our sales and footfall in our malls - in all over Europe. And I think one of the most important element we highlighted is that the improvement is all over Europe in all of other segments which really show the global resilience of the consumer spending in our malls.

[Rob Jones, Exane BNP Paribas]

Okay, agreed. And can I have one follow-up question to that?

[Stephane Tortajada]

Yeah.

[Jean-March Jestin, Chairman of the Executive Board]

Yeah, sure, sure.

[Rob Jones, Exane BNP Paribas]

Great. And catching up with retail, strong July [to-date]. In terms of your discussion with retailers at the point of re-letting or leasing renegotiations, are you seeing any pushback to your legal ability to pass through the full extent of indexation to tenants. I appreciate indexation is obviously going to continue to ramp up over the coming months. But are you getting any pushback from tenants at the moment? And if so, are you offsetting that with longer lease duration or at the moment, are tenants accepting those at this?

[Jean-March Jestin, Chairman of the Executive Board]

We index our leases on the first of January every year, so all of them. So I think the indexation for 2022 has been - it’s actually 2.5% for us. And for retailers and plus and minus some of the countries are higher than this but we have not noticed a real pushback on the indexation for 2022. The indexation for 2023 will be probably at higher [level]. The position of the company that the index is contractual - indexation is contractually due but - and we don't see any real pushback from the retailer. So, we will see in 2023 what is the level of indexation but we are of the opinion that the indexation is due and I think the retailers understand that.

[Rob Jones, Exane BNP Paribas]

Thank you very much.

[Operator]

Next question comes from the line of Jaap Kuin at Kempen.

[Jaap Kuin, Kempen]

Hi, good morning. Two questions for Jean-March. First on the risk of political interference with the indexation in France, could you maybe comment on the relevance for Klépierre and what do you think is going to happen? And then second question on vacancy, could you maybe share your vacancy targets for year end, and especially in relation to fashion retailers where there was a lot of worry in H1about their ability to absorb cost increases. Could you describe what you see, and what the retailers are telling you how they are coping with this cost inflation?

[Jean-March Jestin, Chairman of the Executive Board]

Thank you very much for the question. I think on the on the debate, which is currently taking place at the French Parliament and at the French Senate, I will not make a specific comment. So, they are discussion about capping the indexation for smaller entrepreneurs. So, we will know sooner what is the outcome for the - as we know, today it has been rejected at the Parliament, it has been rejected at the Senate in the last round of discussion. So, we'll see. And we'd never comment political debate at the Parliament. When it comes to vacancy target, I think the - I think what is worth being mentioning is that when we get out of the closure, we had a post COVID recovery plan. The post COVID recovery plan we had for Klépierre, we are more than on track. And when it comes to vacancy, the pre-COVID level was 3%. We are at 5.3%. So, there is still a road to go. And as we indicated, I think in the previous comments, we are - we think this will probably more happen in 2023. So, occupancy is strong. The retail demand - the retailer demand for our space is strong. As you know, many of the retailers have seen some of their geographical areas been closed in Russia, in Ukraine and there is a - to a certain extent the flight and China is also difficult. We see clear flight to quality in [indiscernible] Northern Europe. And I think this is a good news of the geopolitical situation for us. Retailers are really seeing European big malls in capital cities and other cities as a safe haven. And which is a good news. So we think this will be a great support for keeping occupancy high and we expect to curb vacancy in the course of 2023.

[Jaap Kuin, Kempen]

And more specifically the cost/price inflation that's facing the fashion retailers, do you believe that they're able to pass that on to their customers?

[Jean-March Jestin, Chairman of the Executive Board]

So if you look at the public information on some of our key retailers, they have already passed a bit of inflation to their customer. The - actually on the first semester the elasticity demand also was doing okay. They have a bit more concern about second half but it's not my job to contend the retailer business but and so they will probably in fashion pass a bit more inflation to their customer and there is no - inflation is not always a bad element. So I’m - we'll see but I think the - yes, even in fashion, we’ll see prices going up in the stores.

[Jaap Kuin, Kempen]

Great. And then a follow-up. The use of short term leases, is it still going down or could you give me - give us a quick comment on that one?

[Jean-March Jestin, Chairman of the Executive Board]

I know we have no comment to do on the short leasing - we don't have short leases. I think it probably you refer to something else. We have disclosed our, I would say, the average firm duration of the leases. And this has not changed from ‘19 to today. So we have I think, if I may, on top of my head, we have 4.4 years average from duration, and this was almost the same in 2019. So we don't see an explosion of short term leases at Klépierre.

[Jaap Kuin, Kempen]

Okay, great.

[Operator]

The next question comes from the line of Rob Virdee from Green Street.

[Rob Virdee, Green Street]

Good morning, it’s Rob Virdee from Green Street. A couple of questions, please. The first one on your outlook statement, it reads quite optimistically. Particularly given all of the news I read on inflation, and pressures on consumer discretionary spend, and a lot of retail - global retailers are talking about perhaps having too much inventories. Are you seeing any of this in your centers, your retailers? Is there any pressure you're seeing on consumer discretionary spend? That's the first question.

[Jean-March Jestin, Chairman of the Executive Board]

I see what we can comment is ICR results and in an environment where inflation was already there, we have seen sales being quite strong in our malls, I have to say. So there is a lot of narrative about what would be the impact on the consumer spending. I think this will probably depend a lot on the consumer profile on the catchment areas. And I think we also have to probably have a different view on what we call discretionary and non-discretionary. Our malls are real mass market malls. So I'm not sure we have the same speed between what is discretionary and non-discretionary for the customer perspective. But once more we are - we look at the numbers, there is a concern about consumer spending going forward. Looking at the GDP goals in our countries at the European level, it's 2.6% for 2022. So we are not ignorant of the economic situation, but we can only comment on what we have delivered. And for the time being it's I think, is pretty strong.

[Rob Virdee, Green Street]

Thank you. And second questions on the investment markets. Clearly, the Nordics have been quite liquid. You've done the transactions in Norway this time in full year as well. How is the rest of the continental European investment market looking? I noted in the release, you do say that you're streamlining the portfolio in a rebounding investment market. And is there any kind of specific countries in Europe that you can pick out to say particularly strong or otherwise? Is there any distress you're seeing?

[Jean-March Jestin, Chairman of the Executive Board]

Maybe just for explaining a bit, every time we sell in Spain, we say Spain is liquid, what about the other countries? Then when we sell in Norway, what about the other countries? But I think we have over the last two years able to sell a bit everywhere. We sold in Germany, we sold in France, we sold the Norway, we - and so I think the markets are, it really depends on the specific situation. So but when it comes to the investment market as a fact, it has been, the rebound has been strong until, I would say, March, April, end of April this year. Clearly today we see a more, wait and see approach, from investors due to the hike in internet sales. So there is clearly a pause not only in the shopping centers or asset class, but I think in all real-estate asset class. So but once more, we can only comment on what we have done. We have delivered €1.3 billion disposal over the last, say, 18 months or even shorter at good yields, so and in many geographies. So we will continue at looking at pruning the portfolio, finding the good investors at the good prices and even though the market is bit [halty] today, we think it will reopen probably in the second semester.

[Rob Virdee, Green Street]

Thank you.

[Operator]

The next question comes from the line of Markus Kulessa from Bank of America. Please go ahead.

[Markus Kulessa, BofA Securities]

Yes. Good morning. Thank you very much for your call. I have three questions. First one, maybe I missed something just on the loan to value which is stable. Post the disposals, can you just quite me quickly how this relatively big amount of disposals where you have been stable, what has been compensating on the other side?

Well, maybe I can start with this one. We have sold the €290 million portfolio in Norway on the 1st of July. So we are providing a pro forma as of June taking into account what happened on the first of July. So the 38.8% LTV is pro forma the July 1st disposal.

[Markus Kulessa, BofA Securities]

Yes, but pro forma April versus December. No, that's what I don't understand this, all the disposals?

[Stephane Tortajada]

Maybe you should go to Page 19 of the presentation we put on the website, you will see that pro forma of the July disposal, the net debt stand at €7.8 billion, which is done €139 million versus last December because basically, we made the transaction closing very beginning of July. And that's why we give pro forma figure of this disposal made in beginning of July.

[Markus Kulessa, BofA Securities]

Okay, with stable asset values, for this all the disposals, your LTV should have been down versus the year end ‘21?

[Stephane Tortajada]

Don’t forget that we paid dividend in one installment during the first half of the year. And the dividend was €1.7 per share.

[Jean-March Jestin, Chairman of the Executive Board]

€480 million.

[Stephane Tortajada]

€480 million. So basically we do not expect to pay dividend in second half. That's why we have a big effect on the first half but dividend will not be there for second half. So there will be, I think a very significant impact year-end ‘22 more than the half year.

[Markus Kulessa, BofA Securities]

Yeah, okay, now that’s clear.

[Stephane Tortajada]

Yeah, so it’s the dividend payout.

[Markus Kulessa, BofA Securities]

The second question is on the NCCF guidance for H2 which is around €1.15. Do you have maybe the components in terms of what's the impact of disposals and also what indexation are like-for-like of you assume for H2 for to get the €1.15?

[Jean-March Jestin, Chairman of the Executive Board]

So we are not used to itemize the second half guidance. We but we - what we can tell you that first of all indexation is done on January the first, okay, so it's done. Okay, it's done. It's not going to be reindexed in the second half of 2022. We have in the guidance for the whole year, so here you want to have a very specific answer for H2 but in the whole year €2.45 cash flow net current cash flow guidance it includes the impact of the disposal, which has been done so far. And it's around €0.07 to €0.08 I think on the full year. And that's it.

[Markus Kulessa, BofA Securities]

Okay.

[Operator]

The next question comes from the line of Florent Laroche from ODDO. Please go ahead.

[Florent Laroche]

Yes, good mornings it’s Florent Laroche from ODDO BHF. I would have two questions. So first question is that I would like to understand how your guidance for the whole year can be conservative. So because it should look at your guidance, actually at €2.45, so we understand implicitly that you expect maybe net current cash flow per share at €1.30 in H2, so compared to €1.20 excluding the one-off effect of the collection of rent for 2021 and 2020. So how could we see that conservative? And maybe my second question is more on your strategy at medium term. So, we understand that you want to continue disposals. In the meantime, you are very cautious on the pipeline. So what is your strategy from a midterm standpoint on the cash on the growth of the cash flow? Thank you.

[Jean-March Jestin, Chairman of the Executive Board]

So, thank you very much for the question. We give a guidance so, I'm not sure we have to qualify if it is conservative but to please you, I will say it's probably more conservative than I [see]. And by nature, at Klépierre we prefer to beat the guidance than not. But the set of the H1 has been strong. The push from 2020 and 2021 also proved the extreme resilience of the company. We are collecting - so, we are collecting rents for 2022 but also we see the retailer setting the dispute for 2020 and 2021. So, I see this as a very positive signal of the strengths of our customers. When it comes to - but to conclude, we are not ignorant that the situation may be a bit complicated for the second half. So we have made a guidance which takes into account the current situation. For disposals and pipeline, we - the disposal strategy has always been to continue steadily to a prune the portfolio and to reconcentrate on the best assets. And we are seeing what we may call noncore assets and concentrate on large cities, large catchment area more than a million inhabitants with revenue per capita higher than 20% of the national average. So we stick to the strategy. It's a medium, long term delivery for us but we are doing it. So we’ll continue. And we have been successful, I would say over the last 12 months. For the pipeline, we do have a summer pipeline. We have €2.5 billion pipeline. But in the current environment, we were a bit on wait and see, but we will continue to deliver on the extensions for our best assets as we did for Gran Reno which is extremely successful. So we will continue to deliver value to our shareholders through, I would say a very well controlled pipeline or stream.

[Florent Laroche]

Okay. Thank you very much.

[Stephane Tortajada]

So I think we have a question from Inna Maslova from Degroof. Can you please elaborate on the indexation that has been secure over H1? Are you able to pass on full indexation?

[Jean-March Jestin, Chairman of the Executive Board]

Yes, I think it’s a bit of a repetition of a question that I already answered. I would say the almost 100% of our leases by contract, they are indexed on the 1st of January. So we have charged the indexation for 2022, the 1st of January 2022 is done. It's paid. So it's over, okay? And we pass the full indexation. And we will do the same January 2023. On the 1st of January, we'll pass the indexation to the retailers, contractually it is due and for the time being we don't expect any major concern.

[Stephane Tortajada]

And we have another question from Jonathan Kownator from Goldman Sachs. Can you please comment on your ability to pass on inflation to retailers? Are you able to pass it through? Or have some reluctance? And second question, do you expect progression to turn negative as a result of high inflation?

I think it'd be the same.

[Jean-March Jestin, Chairman of the Executive Board]

I think we look at the inflation impact on our business at Klépierre. So we have a cost based off G&A and such expenses, which is around €100 million. So we for 2022, this is under control and we will, like many corporations will have to deal with the wages increase for 2023. But I think this is at the level of Klépierre for the - this is clearly manageable. I think the most important element is the level of service charge we pass to our customers. We roughly charge €350 million of services for security but also property taxes, cleaning and many other services and energy. Energy is clearly going up in 2022 by 40%, as you know, and this we are working on to continue saving, reducing energy consumption, but clearly in the whole package of service charges, energy consumption is on the rise. But on the other element, most of the contracts for cleaning, security and maintenance, they are - there were secured for 2022 and some of them for 2023. And there are more wages and related, indexed. So, and probably it would be much softer than the global inflation in all the countries which is pushed by the energy. So I think when we look and we don't have a lot of project under construction. We don't have a lot of renegotiation to do with construction companies because of inflation. So, I think for 2022 and also going forward for 2023, we see it as manageable but we will report in due time for 2023 when we will have contracted all the service charges to our tenants. And once more they are passed to the tenants at an odd percent.

[Stephane Tortajada]

Another question from Sander Bunck from Barclays. It looks like the total pipeline has increased from €1.2 to €1.8 billion group share over the first half, can you give a bit more color on the type of developments that have been added or likely it is that the additional development will be executed and whatever return you will expect from the incremental development pipeline?

[Jean-March Jestin, Chairman of the Executive Board]

I’m not to get exactly the question. I understand the question perfectly, but don't we miss group share and total share? Yeah, so what I propose that on the numbers, we take the question off and then we go through the explanation but the pipeline has not really changed from last year to this year. So I propose you to see it off to clarify your understanding.

[Jean-March Jestin, Chairman of the Executive Board]

So thank you very much for attending this call and thank you very much for your question. And we are looking forward to see you soon. And for those who are taking holidays, please enjoy your summer break. And this is ending the call for today.

[Stephane Tortajada]

Thanks.

[Operator]

Thank you for joining today's call. You may now disconnect.