Warehouses de Pauw NV
XBRU:WDP
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Warehouses de Pauw NV
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Ladies and gentlemen, welcome to the WDP investors and analyst call regarding the HY 2019 results. [Operator Instructions]I will now hand over to Mr. Joost Uwents, CEO; and Mr. Mickael Van Den Hauwe, CFO. Mr. Joost, please go ahead.
Thank you very much and good morning, everybody here for our half year communication and the first time in our new growth plan up to '23. And indeed, we can say we started very well in this new growth plan. Remember, the new growth plan for that we need to invest, let's say, around amount EUR 100 million per quarter during 4 years in order to realize our EUR 8.00 per share. In the first year and we started not with EUR 200 million, but with EUR 325 million of new projects secured, which is let's say, more than rounded our EUR 100 million plus one big project, the biggest chocolate distribution center of the world for Callebaut in Lokeren, which gives us an extra which lets us realize EUR 325 million.Besides this, I think our earnings per share, they are perfectly in line in order to obtain the year-on-year growth of 8% towards EUR 6.5 by the end of the year. We kept our occupancy rate at the high level of 97% and the portfolio has grown further up to EUR 3.8 billion, with important more than almost EUR 500 million of developments and going to the largest amount ever.So let's say therein like I mentioned, a perfect start of our growth plan and important is that let's say the growth came from everywhere, not only from one country. That's from all of the countries. All of the 3 platforms did great work. And the Netherlands stayed our biggest growth market, with 43% of the growth, but also Belgium-Luxembourg with 34% and Romania with 25%. So all of the platforms did what they had to do and brought us together the EUR 325 million of new projects, which are, of course, most of them driven by new developments and only some acquisitions.So there indeed it all fits perfectly in what we told you that we should do the next 4 years at the end of January, the beginning of this year. And indeed our growth plan, driven by the 3 platforms which has to invest EUR 500 million per platform the coming 4 years, it stays driven by I think today the drivers of the market are there is enough volume. There are a lot of projects. But the question is we have to look for the profitable projects and so indeed we can grow further, but driven between volume and profitability. But before going deeper in our own figures, we would like to give a little bit of insight in what's happening in, let's say, our market, what's happening in our warehouses in the markets itself. And indeed, like we mentioned in January, our buildings are getting every day more intelligent, more modern and they are in the heart of every company today supply chain more than ever is key for every company. If you don't invest in your supply chain today, then you can, let's say, forget it. There you make a difference there how companies are investing in today, driven by let's say our new way of buying as a consumer. We do it everywhere whenever we want, in every way, not only by the stores. And that is only realizable by our fulfillment center, by distribution centers. So it's driven by the supply chain and then indeed in order to realize an efficient supply chain, you need intelligent modern warehouses. And it's all driven by -- so that added value that logistics offers today, driven by the changing consumer behavior, thanks to technological developments and digital connectivity, driven by the instant gratification of the human begin which has always been there, but now let's say made possible by our iPhones, by our mobile phones and also of course by the new very efficient logistic platform. So all the companies are indeed investing a lot there and this leads, of course, to structural demand for logistic space, from all the sectors, from all the companies, not only e-commerce. Indeed, e-commerce itself, there we have been to a specific logistic seminar in June of CBRE, The Power of Three. And there it was mentioned that indeed only due to let's say thanks to the growth of e-commerce in the coming years, they see a growth of new space needed for the next years. They state only e-commerce will ask for new logistic space, but it's so much more in all the sectors, all the companies who need to think and invest in their supply chain. And indeed, the supply chain, how it will be personalized, automated and local. So there more and more, all the products and the services will be more and more personalized, therefore, we will need automated warehouses with really high-tech investments in order to fulfill all those wishes of the consumer. And it will also need to be local to be close to the consumers, and so this is how companies are, let's say, investigating and investing in and therefore, of course, they need our warehouses. And this gives a lot of activity for us in all the sectors in all our countries and there indeed we had also a very good first half year. We delivered more than 100,000 square meters, mostly in the Netherlands, which made another EUR 85 million, which can contribute now to our results. And indeed important, we have record volume of square meters under development. Until last year it was around 500,000 square meters and now we have up to 700,000 square meters or almost EUR 500 million under construction, under development and all well spread over all of our 3 platforms: 125,000 square meters in Belgium and Luxembourg, around 175,000 in the Netherlands and 400,000 in Romania; which brings us to almost EUR 500 million which are now in execution with global average yield of more than 7%.So let's say the machine is working and ready to support the earnings per share growth up to EUR 8.00 by '23. And indeed, I think the biggest and the nicest project of this first half was the world's largest chocolate center global new distribution center of Barry Callebaut, the biggest producer of chocolate in the world. And of course this project had to be in Belgium, chocolate country, and even in my home town, Lokeren. But it's let's say also a very nice example of what happens and why the supply chain is so important, because there at Barry Callebaut they invested a lot in their production. But indeed, in order to be ready to grow, they needed to invest first in an efficient supply chain. And it is very sustainable, thanks to the Forever Chocolate strategy of Barry Callebaut, so it will be one of the most green buildings in Belgium. It will be an energy-neutral building, but it will be, let's say, sustainable in land efficiency. Because you can, of course, use a lot of land, but the land needs to be available. And therefore, they use also a fully automated highway, which meant that they can on 10 hectares have 55,000 square meters of building space. They can store more than 125,000 square pallets, which is very huge. So there is also efficient land use, very efficient due to the automation super modern cooling techniques inside, so top quality, top really state-of-the-art. In Belgium, it's an eye-catcher or it will be an eye-catcher in Belgium within 2 years.And besides this, we also want to explain a bit more about our developments, our let's say, the way of working our puzzles and also the impact it has on rental levels because we hear a lot about what is now the evolution of rental levels. Well, I think in Bleiswijk we can give a very good example of what happened the last years. In Bleiswijk, we started in 2014 with a small project of 10,000 square meters for Tansmark and at that moment we did a development at an 8% yield with a rent per square meter for the warehouses of EUR 60 that some years later there will become more activity in the heart of the Netherlands in the middle of the [indiscernible] and 2017-2018 we could do a lot of new projects. And there we started developments of 7 went down to 6% yield that at that moment that resulted in a market rent for the warehouses of EUR 53-54 per square meter. So this was driven by lower yields and also efficient ways of cost reducing. So there we got EUR 53-54 and now indeed on the same place we still can do projects at 6% development yield, but our market rents are let's say again at EUR 60.So if you look from 2017-18 up to now, then you say there is indeed rental growth, but you have also to compare it to 2014. And then indeed, there we are now at the old historical levels and this is on the short term a good sign, since we said in the years before that we have to give back half of the inflation towards our tenants when they came up, let's say a break moment, to renegotiate the lease. And now based on that, for those old contracts of the good old times, now we have to give back less to them. And this is the first basis so that we can indeed more that our like-for-like growth will get more closer to inflation than before. So this was, let's say, to give a little bit an example of what happened in the rental market the last years. Besides this, of course, there is still development potential in the portfolio. We still have EUR 100 million of land potential for development. It's not static, now it's a dynamic amount. And of course we transfer projects to developments and also we added new land reserves. But in the end, we kept around EUR 100 million of land reserves. And beside the land in our balance, we mentioned in June our intention of working together with VIB for a North Rhine-Westphalia, Bremen and Hamburg that will also be the potential for, let's say, next year we will finalize our corporation between the 2 parties and then can start operations. And it will indeed help our clients further in order to help them further and not having to stop at the borders to Germany. So this is also a potential further for the future. Besides this, we have indeed our model, our deep market penetration and the Benelux and in Romania where we try to help and we can help our clients almost everywhere. When we then look further to our portfolio, fair value indeed the Netherlands are still our biggest market, for the rest no big evolutions in the portfolio and you can see there our gross yield of the total portfolio is 6.4%. It's around in 6% in Belgium, the Netherlands and France and 8% in Romania. So we have had a revaluation of the portfolio the first half year of EUR 150 million, but even then our fair value is still 1/3 land, 2/3 buildings and we come up with fair value of EUR 710 per square meter, which is still very conservative. Portfolio, there are let's say no big changes. You know that we do all kinds of warehouses. We don't specialize in one specific segment. We do them all and we love them all as long as it is warehouse space. And if we then look to the occupancy of our portfolio, there we are today at 97% of occupancy. This is a little bit less than the beginning of the year since we had 2 bankruptcies of 2 small buildings of 10,000 square meters in Belgium. But for the moment, we are already in renegotiations and we have 2 potential clients besides, so let's say we are confident that we will be able to re-let them as soon as possible. And further, there are indeed no reasons that we could not stay in the same levels and our occupancy rate will stay at the same levels as today. In our client base there too nothing specific changed, no specific big changes and important still there is to stress that 60% are still end users we have, let's say, which invest more and stay longer in buildings than logistic service providers. And then I give the word to Mick to explain you what all those activities give on our figures.
Okay. Thank you, Joost, and also welcome from my side. When we take a look at each one, 2019 results, again we have showed double-digit growth in our rental income, which is obviously mainly driven by a steady stream of development completions, as we are now delivering on average over 100,000 square meters per quarter. That is mainly in the Netherlands and Romania over the last 12 months, where the growth has been coming from and also driven by 1.6% like-for-like rental growth. And to follow on, on the comments made by Joost, so to give you that breakdown that is the 1.6% boils down in 1.8% in indexation and a marginal minus 0.2% of the occupancy rate, which has marginally come down and no impact of the renegotiations. And that is, as Joost mentioned, in our business plan we foresee that on an aggregated level, we need to give back half of the inflation rate back to the tenants so that based on a stable occupancy rate, rents should grow organically by around 50% of the indexation. But due to that effect of the renegotiation of needing to set back the rents for a long index context close to the days' rent that is -- let's say that effect is becoming much lower and we foresee that there is a tendency that it will converge more the like-for-like route towards the actual level of the inflation.Then solar income was also quite strong, even matching also last year's performance on an organic basis, which was exceptionally strong and also still a year-on-year increase due to the capacity that was added in the meantime. That is the rollout of the new capacity is gradual. That's a bit slower than foreseen, because it concerns many projects that were adding 25 megawatt peak, it's 25 negotiations which climbed 25 projects, but gradually we are adding this capacity, these 25 megawatts peak that is in the pipeline which will bring us from 60 to 85 megawatts peak and our ambition towards an installed capacity of 100 megawatts peak in the medium term is still intact.Then in terms of property charges and G&A expenses, you can see a rise probably in line with the evolution of our revenues, leading to a stable operating margin of a bit less than 92%, which is in tune with our budget and guidance for 2019 as a whole and in line with what we foresee as operational profitability in our business plan. I just want to make one comment on the EPRA cost ratio. Our apologies, but there was a slight mistake in the press release in the summary table. It stated this morning EPRA cost ratio of 10.2% that needed to be 9.8% like it was detailed in the annexes of the press release. We corrected that on the website, so sorry for that. The evolution year-on-year when you compare the 9.8% in H1 2019 versus H1 of last year, the increase of more than 1% is due to an unfavorable comparison base. But when you compare it to the 9.5% for the full year 2018, it's pretty much in line, and actually, there is nothing very special or that has changed when you look at it from a back-of-the-envelope point of view and you take our operating margin of 91.5%. 1 minus the operating margin is 8.5% and you add then the net effect, the net charge to WDP of the property taxes that's about 1.3-1.5% and then you have the EPRA cost ratio which we foresee to maintain at stable.Then below the operational results are financial expenses in line with the budget and at 2.3% in the first half year. We forecast it to be 2.2% for the full year, as the incremental debt that is added is at a lower cost. Then in addition also, I need to make this technical comment. You know that IFRS 16 lease accounting, which mainly impacts our tenants, also has an impact on us that's for the land we do not own, we rent from government-related entities through concessions. We have already reflected that impact on the balance sheet at the end of last year. Now we reflect also the impact in the P&L, which is the recurring cost of the concessions, the land leases. And that is now reflected in the financial results rather than through the net rental income, so the top line, so it's only a re-class, no net effect. It's a re-class of EUR 1 million. Now summarizing EPRA earnings per share, showing a nice increase of plus 8%, which is exactly in tune with our scheduled EPRA earnings per share for the full year. And on the non-cash side of the P&L on the portfolio results, I'll give you some color and details on that. Property values were up by 4%, year-to-date around EUR 150 million, which came mainly from a 25 basis point downward yield shift on the existing portfolio. Then with respect to the uplifts on the development completions, we say 10% to 15% value uplift. That is a figure that is stable. This value uplift is development gains. And I also want to make a comment that these developments are in contrast to typical pure-play developers based on low rents since the climate is competitive and we also try to lock in the tenant for the long term through a low rent. And the development uplifts were rather limited in absolute terms because there was a volume of around EUR 90 million completions in the first half of the year compared to the whole pipeline of EUR 500 million still in execution. Then on the balance sheet, I think that's pretty straightforward, a strong increase over EUR 300 million in our asset base, a combination of the investment volume, the execution of the pipeline and one acquisition in the Netherlands, growing into our balance sheet in combination with the revaluations. And all in all, also in combination with let's say the stock dividend that led to a loan-to-value which was pretty much stable, a little over 50% and comfortable within our guidance range of 50% to 55%. Then for the first 2 quarters on Slide 36, the most important milestones on the financing on the equity side, the equity has not only been strengthened by portfolio revaluation and development means, but also through the stock dividend with a take-up of almost 60% and which will together with the total retained earnings in 2019, contribute EUR 85 million. And actually, that's a very nice figure of auto financing because as we are a REIT with a payout requirement of at least 80%, in reality we effectively distribute less than 50% of our EPRA earnings or FFO. And then also on the capital structure, we have obviously discussed the LTV. But in essence, this metric is skewed and sensitive because of portfolio revaluation, therefore we also publish our net-debt-to-EBITDA. And on an adjusted basis, excluding the debt invested in the projects and on an annualized EBITDA basis, and this metric is at 9x, which compares and continues to compare well in a wider European REIT sector we think.And we also take also a look always at the longer term perspective. There we can confirm our strategy of us being disciplined when it comes to our funding and matching property acquisitions with synchronized debt and equity issuance, as you can see in this slide. We will continue to do that and also confirm that we will not leverage up on any significant portfolio revaluations. Then on Slide 38, on hedges and cost of debt, all in 2.3% for the first semester, should be around 2.2% for the full year. And note that due to the strong decline in interest rates, we've been able to expense some hedges maturing in 2022-2023 towards 2029 on a cash-neutral basis. I want to stress that, so without any break of fees, cash-neutral. It's a mere extension of our hedging and which we also slightly reduce the cost of debt by EUR 1 million or shave off 5 basis points as from next year. And all in all that also gives us a good, let's say, debt repayment capacity with an ICR which stays strong at 4.5x. And also in terms of debt maturities, nothing very special here, well spread in time with an average duration of 4 years and actually 5 years if you exclude the commercial paper, which is fully covered by backup facilities. Then I think as far as the outlook is concerned, I think Joost and I already confirmed that we confirm our guidance we have provided at the start of the year, which is an EPRA earnings per share of EUR 6.50 and a dividend to be proposed of EUR 5.20. And that is underpinned by our results, which are perfectly in line with this budget. And also please note that as we are focusing on development projects, the consequence is that we cannot really have a material impact on the current year earnings and these projects will start to generate rents next year and the years thereafter. And the advantage is that at the start of each year, we know what the earnings will be and we are less dependent on acquisitions, and we are really focusing on the long-term goals in the business plan and that this amongst others through this volume of EUR 1.5 billion, achieving the EUR 8 earnings per share target in 2023.So that's it on my side on the numbers and the outlook. I give it back to Joost to give some further flavor.
Yes, okay. Thank you, Mick. And indeed, let's say as we were already since a long time sustainable and thinking and looking and investing in our sustainability and the environment, let's say we organized it now more in a structural way and we really made an internal ESG roadmap, let's say, following our growth plan from today up to '23. And it's indeed based on the 3 elements: environmental element, social element and government element. And therefore we have chosen 7 United Nations sustainable development goals, which we will explore and which we will work out further in our organization. And it's all about the corporate culture, recruiting and retaining talent, health and safety, employee development, digitalization, energy efficiency and corporate governance of course. And in order to let's say adapt further our corporate governance to the new structures, therefore, we let's say invite you all to our AGM in September and we ask of course to come and vote because it will be an important one. First of all, we will ask for a mandate for authorized capital and our own share purchases. But much more important is the fact that since some months, it is possible also let's say finally for Belgian REITs to do accelerated book buildings. But in order to be able to do that, we need to adopt and we need to ask if first to the shareholders to ask a mandate in order to be able to do that accelerated book building, which let's say gives us a level playing field with all our European colleagues. And besides this, we will also convert our limited partnership by shares after 20 years of using this and we will now change into a normal, let's say, in a more normal public limited company which is also more -- let's say we acted already during all those years as a public limited company, but now we will really also become a normal public limited company, which is indeed also good and brings our real governance more also in compliance with law. And we will also use this shareholders meeting in order to ask for a share split because after 20 years we started at EUR 23 per share 20 years ago. We are now above EUR 150 per share and I think it's a nice moment to go back to IPO price and to split the share in 7 in order to enhance liquidity. I think is the first and main goal, and also it's a little bit of psychology towards the private investor, which is also important and which we don't want to forget that they will invest faster and more in let's say prices are around EUR 25. And so in order then to not forget all those private investors which were there from the beginning, we go now back after 20 years, ready for another journey.And a last point towards the conversion, we give some details on the slides. There, let's say we changed our structure from the old trial for us with Tony, Mark and I together with the board of directors to a more normal classical structure now where we keep our board of directors in full. There is no changes. But below that, we will get, let's say, a more normal management structure with the executive management of Tony and I, then together with our management committee, of course, supported by Mick, together with the 3 country managers of the 3 platforms and Marc De Bosscher, with our Chief Technical Officer. So this will also prepare us further for growth and further preparing for the future in order to be able to let the company further grow and create value for our clients and our shareholders. Thank you all for listening and now we are ready for all your questions.
[Operator Instructions] We have one first question. Ma'am or sir, can you please identify yourself and ask your question?
Robert Woerdeman, Kempen. Starting with the first question, you made quite some in depth backward-looking statements on the rental market for a specific case, Bleiswijk. But if you would look in your crystal ball with the knowledge that you have, with the discussions that you have with your tenants, what can we expect, let's say, 2-3 years from now with rental levels for logistics? If you read into press releases of Prologis, Segro; they're all very, very upbeat of the rental market. But if I listen into your statements, it is going up. But it seems like we should not be expecting much more than inflation. So what will be your forward-looking statements on the rental market?
Well, there's a difference, let's say, Robert, between the rental markets and the effect in our results, because there let's say we all go for contracts as long as possible. And then indeed, the contracts of 2014 were 10-year contracts. So when they become to a break, let's say, therein we are more comfortable today than some years ago. But the one of 2017-2018, they are also most 10-15 year contracts. So let's say we cannot, even when the markets are better and the prices today are indeed not everywhere, but in let's say in more and more regions are higher than the last years. And they will only come, let's say, in our P&L in the long run. And so it's not that this will give a direct impact since indeed you could say then you can have higher development margins. But it is not possible since land prices and construction prices went up. So the good thing is we can keep our development margin on the same levels. Rental prices are higher, but this will not let's say, give direct in the short term higher revenues in the P&L.
Okay. That's clear. Perhaps as a follow-up, to make it even more precise, if you look at Bleiswijk and most of your markets, I think you mentioned we're back to the EUR 60. Would you expect that EUR 60 let's say in the next 1-2-3 years going up by, let's say, 3%, 4% or 5% per annum, or would you expect this to see more moderate growth? And obviously, if you would basically have that view on the rest of the portfolio, so in Benelux, France, Romania; that will be helpful.
No, we don't see further growth of 5% per year. That we don't see. We have seen an uplift on certain places, let's say, back to historical levels. And it is not -- we took the example of Bleiswijk and let's say this we can find back certainly almost in whole in the total of the portfolio. But it's not that we foresee that prices will go with up further with 5% a year.
Okay, so if we would model inflation, you would feel comfortable with that?
Yes, indeed.
That's very clear. Then would you be able to comment on the current transaction market? Because there's a lot of talk of transactions and we have seen quite a bit. What are you seeing? Probably you see more transactions than we do. And what kind of yield movements or value per square meter movements are you seeing? And how has that basically evolved over the last 6-12 months?
I think there indeed the Netherlands stays very liquid in a very transparent market. That's always been the case. So we see a lot of transactions in the Netherlands and there indeed yields go down further and they go down to sometimes 4%. There are some people even crying harder. But let's say they are for the moment crying. But let's say the market in the Netherlands is between 4% and 4.5% yield. In Belgium, there is just less activity, but I think investors are willing to pay the same price, but there is no activity since it's a small country and everybody who has buildings keeps them. And in Romania, there let's say we see there is also for the moment a lot of building activities. But there we see the first signs of revaluations and I think there will be -- we see some transactions. There are some projects running, some portfolios or some buildings, let's say, for sale. And we think that we will get a revaluation of the Romanian portfolio by the end of the year.
Yes, okay. But interesting to hear your comments on the Netherlands, most liquid, most yield compression; whereas if you look at the year-to-date numbers, obviously you've posted the best value growth in Belgium. Would that mean that the appraiser still in the Netherlands is behind and so we can expect more for the second half or what's your view there?
That you have to ask to our valuators because it's still more an art than a -- but indeed I think we had a lot of revaluations in the Netherlands the last year.
The Netherlands was faster to start the revaluations, at least from the appraiser side. It still very, very slow and you know that. And what we saw in Belgium in the second quarter was also a catch-up effect that has played.
Yes, okay. That's clear. And I don't want to ask too many questions, but a last question on this one, I was intrigued by your comment “ready for another journey.” How should we read that?
Ah, no. It's just let's say we started 20 years ago and are now back to the EUR 23, let's say. And then we can start a new journey for the next 20 years, so nothing more than that.
We have another question. Please identify yourself and ask your question.
Hi, ING, Pieter Runneboom. Could you give us your view on the current developments market? Do you find it, for example, more difficult to source new lands? And what's your outlook on rising construction costs?
It is indeed more difficult to find land and to get permits. It takes, in general, over the portfolio it is indeed more difficult and it takes more time to find land. That is indeed true. Construction prices went up. And I think now they are in the Netherlands, for most in the Netherlands, but now we see let's say their stabilization on a high level. They don't come down but they don't go up further for the moment.
And also there aren't many projects clients are expending. And what we saw in the last couple of years due to, Pieter was a very strong and intense competition on the acquisition side and then also due to the opportunities and our knowledge of always having been a developer. For our own account, we received to us more developments and now it almost fully dedicated on developments and occasionally some opportunistic when it fits our criteria, acquisitions. But also the development side has become very competitive. But the reason why we can still attract many attractive projects is the fact that we operate as a developer and the investor. That is very important for the clients. And even in the last 12 months, I think if I recall correctly, we had 2 or 3 clients asking for a clause in the contract that we should stay at least until for the first 10 years and then as long as we are in the building, the owner of the building. Because they want to work with us as their partner.
As a long-term partner, not only for the development but also after that for during [indiscernible], because that is the most important element and the most important moment for our clients.
Okay. And a follow-up question, what are the consequences of the recent constructions costs on the development margins?
So we can, like I mentioned in the Bleiswijk example, we can keep our development margin and then rental prices have to go up. Therefore, let's say, the rental prices in Bleiswijk went up from EUR 53-55 let's say around EUR 55 to EUR 60, due to the fact that with the same development margin and land prices went up and construction prices went up.
We have a next question. Can you please identify yourself and ask your question?
Frederic from Kepler. I've got one question on Romania. Do you see a rapid compression of the yield in the country?
There in Romania, let's say, the yields have been let's say around stable over the last couple of years because also there was only a developer's market. And there were only a couple of players of the type of WDP and there was no, let's say, there was no product to buy because everything thing still needed to be developed. The market still needs to be developed. This on the development is growing very strongly and is therefore not institutionalized on the let's say investment market side. And what we see today that there is more product available and there are more and more players on the investment side also interested in Romania and there are a couple of buildings, portfolios for sale. And we believe that will have an impact on market yields downwards impact of course on market yields. And we believe that that's evidenced when it feeds through in the closing of these transactions, will feed through in our portfolio.
It's getting investable. Romania is starting to get investable. And careful, but let's say we see there it's starting to get investable.
But in the meantime, we are happy that's it's stable too for our development team.
Yes, because at the moment I see that you are still about to build above the 8%. But my best guess would be that prime yield would be around 7-7.5%. What do you think about that? Do you think it's too soon to say that and that we should wait to have more information about the transaction you are mentioning?
Well, that is in line with what we see that the valuators use an input yield of 7.5% to 8% to value our buildings. The output yield is 8.0% growth. And indeed, we see in the market that it will be at least--
Below, but let's say wait for the valuators. And it will always take more time.
How much it will be, let's say, that depends on these market transactions and on the appraisals themselves and that's not up to us. We can only highlight the trends.
Okay. And I've got another question on Romania and it's more a question on what's on the figures regarding the “evolution”, of the rental income. I see that total rental income year to date in Romania is EUR 14.1 million. However, if I look at the peak quarter by quarter, I see that there was a slowdown from 7.2 in Q1 to 6.95 in Q2. My guess would be that you recently invested in the country, so these are for the long run. So I was a little bit surprised by the slowdown. Is there any particular reason?
Yes, there was no -- on the Q-on-Q versus Q2 versus Q1 evolution in Romania, there were no development completions, which are scheduled for later in the year. So there was no impact of external growth. And we acquired one building last year, a EUR 20 million building as to be the full owner in a brand new development industrial park, where there was already an older building. And we bought it to be the strategic owner of that whole industrial park. And it was with shorter leases. I think the only building in Romania where we have shorter-term leases, and we know that we discounted that also in the acquisition price that rents would be a bit lower upon renegotiation and there would be upon renegotiation of the biggest tenant that is Proctor & Gamble, a short vacancy period. And that happened in Q2, but that was also fully discounted in the acquisition price.
Thank you, sir. We have no other questions. [Operator Instructions] We have another question. Please identify yourself and ask your question.
[indiscernible]. Just can you remind us your average age of your portfolio? That's the first question. The second question is regarding your valuation yield. I mean is it because of this age, do you think the [indiscernible] won't go further down? I mean can you just give us an idea on how the age of the portfolio is taken into consideration in the valuation?
Yes, the age is relatively 7.6 years. And it also based, it's in the presentation on Slide 28. And the quality is very high and it's also the portfolio has been built by WDP and its team itself for over 50%. And also for the older buildings in the portfolio, the historical older buildings of the historical Jos De Paux portfolio, they had mostly been sold and also the older buildings in the portfolio is what we call in the slides a future redevelopment potential. These are, let's say, sale on these back transactions we've done and for which we have acquired land at land value plus some cash flow. And even the average age will further decline as we add this EUR 500 million development pipeline, so this is actually quite young and new and modern portfolio.
Yes, so this is not a stop on the revaluations or no. It's more the fact that we have, let's say, that we are very broad in our type of buildings and in the locations where we do it, more than just at the 3 to 5 hotspots. We are, let's say, everywhere in the countries we are and there are not always, let's say, every month transactions in every city where we are. And this is sometimes more difficult for the valuators, more that than -- absolutely not the quality.
Thank you, sir. I have no other questions.
Okay, no further questions?
[Operator Instructions]. We have no other questions, sir.
Okay, thank you, all, from everywhere in the world of listening to us and listening to what happened in the logistic world in Europe. And we all hope to see you soon when we are on roadshow in September and October or other events in autumn. Thank you and see you soon. Enjoy summer.
Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.