Warehouses de Pauw NV
XBRU:WDP
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Warehouses de Pauw NV
Earnings Call Analysis
Q2-2023 Analysis
Warehouses de Pauw NV
As WDP maneuvers through an economic landscape marked by 4% converging interest rates and inflation, and a slowing economy, the company adapts to the new cost of capital. With noteworthy development yields above 7%, WDP has pursued acquisitions and developments valued at 125 million this year. Despite a global slowdown affecting construction, stocks, and decision-making speeds, the demand for warehouses remains robust, supported by persistent limitations like land scarcity, on-site electricity, and workforce availability. These driving factors, coupled with a 6% like-for-like rental growth and rents still 9% below estimated real values, have propelled WDP's revenue upward significantly, as illustrated by a rent increase from EUR 550,000 to EUR 750,000 for a warehouse near Brussels. Looking ahead, WDP projects an EPS growth guidance of 12% for the year, with a solid balance sheet backed by a loan to value below 40%, a net debt-to-EBITDA of 7%, and robust fixed cost of debt at 2%.
Investors eye a market where inflation and interest rates are stabilizing, even as it compels acceptance of a 'new world' that isn't temporary. Opportunities emerge as sellers adjust to new price realities and markets begin to open. With a cautious optimism, WDP indicates that more opportunities could surface around September, albeit questions linger about the readiness to sell at adjusted prices. The company remains judicious, easing off from previous development goals, aiming now for EUR 250 million a year in profitable developments and investments, down from EUR 500 million.
WDP emphasizes its long-term commitment to clients over short-term gains. The strategy involves negotiating with tenants rather than pursuing maximum short-term revenue, nurturing relationships that have driven growth over the past 25 years. This client-centric approach will persist as the company continually seeks to align financial growth with sustainable tenant partnerships.
Despite an unchanged landscape where land prices are not declining but increasing, WDP remains on the lookout for land acquisition opportunities. In Romania, WDP maintains a disciplined strategy, keeping investments within a 20% portfolio limit and engaging in developments where profitable. Moreover, the company experiences steady ERV growth in Romania and can pass all European indexation levels onto tenants. In the broader investment market, the company identifies Western Europe yields slightly gravitating towards 5%, mirroring the trajectory of funding costs.
Year-on-year, WDP's solar income grew by roughly 5%, influenced by a combination of capacity expansion and fluctuating power prices. While most solar income is fixed or hedged, a portion linked to Belgian spot markets remains vulnerable to volatility. Long-term energy price forecasts remain intact, protecting solar income into the future. For new capacity, hedges on electricity prices are typically set for 1 to 3 years but are limited to short-term horizons for practical reasons.
WDP enjoys robust support from traditional lending banks with minimal changes in pricing. A diversification strategy over the last decade has facilitated good access to unsecured lending at reasonable rates. The company reports approximately 15 bps increases in margins over the past year for traditional bank lending, with undrawn credit facilities reaching EUR 1.5 billion, ensuring ample liquidity for further investments.
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Good morning, everybody. Good morning from Wolvertem. Let's start and look a little bit more close to what's happening in the logistics real estate market in Western Europe. I think we can say with interest rates and inflation, both converging towards 4% by year-end and an economy who is slowing down. I think step by step, the fog is clearing a real estate country. And we, as WDP, we adapted ourselves again, taking into account the new cost of capital for a longer time. Our 125 million new acquisitions and developments this year are the proof of that with development yields above 7%, taking into account, of course, all elements of a development.
Yes, the future will be more complex, more re-developments -- taking into account the specific location, I take it as we showed in our property tour at the Kempen seminar at the end of May, and our energy investments, adding a new friendship to our storage and distribution points, namely charging points. And who knows more acquisitions to come. Besides this, I think we still can say that the fundamentals of the logistics real estate market are very strong. Yes, economy and construction are slowing down and probably stocks too, but this does not mean that there is less need for Warehouses. Only the throughput will be less.
And decisions are taking longer. But this is the normal way of acting in the cycles. A little example, the half year results of [ Power and Naval ] this week, Power and Naval, sea and air freight minus 50% of first half year. So that's about a slowing down of transport of goods between the continents. But on the contrary, Power and Naval contract logistics flat. So the handling in the warehouses stays where it is.
Scarcity, scarcity of land, electricity on-site and workforce drives our clients to take care of what they have and automated. Anyway, more investments in the heart of their business, their warehouses. All this supports rental growth, at least following inflation. This gives us a like-for-like rental growth of more than 6% and current rent still 9% below ERVs.
I give you a small example of what we have seen in our portfolio near Brussels in 1 year and in 2 steps. We hired the rent in a warehouse from EUR 550,000 up to EUR 750,000. The ERV of today, often a bankruptcy of the first new client.
In Dutch, we should say, we can have perhaps a border. And then our results. This -- all those things come together in our EPS growth guidance for this year of 12%, 8% recurring, 4% one-off with.
Don't forget it's 10% more shares than last year. And this supports strongly our growth plan up to 150 in '25. And in order to be able to do all this -- we can rely on a strong liquid and fully hedged balance sheet with a fixed cost of debt of 2% this year. Still having full entrance to unsecured financing. A loan to value below 40%, net debt-to-EBITDA of 7% and becoming more and more important, a strong ECR of more than 6%, thanks to full and long hedgings in the past.
So more than enough from our side. Now it's up to you, and we are open for all your questions.
[Operator Instructions] We have a first question from Pieter Runneboom from Kempen.
I was wondering what do you currently see in the investment market? And are there some interesting opportunities already to be seized?
I think it starts, let's say, people because of the fact, like I said in the intro, we see stabilization of inflation and interest rates by the end of the year. So I think everybody now understands that they have to accept the new world and that it is not temporarily. And there you see that they get step by step, you see people who have to refinance, who have to sell or say, okay, we have to adapt to the new reality let's start again. So we see step-by-step some potential files going to the market. And we think that we will see more of them, let's say, as of September. But then the question is, will there be -- are they already willing to sell at the adapted prices? But we see opening of the markets.
Next question from Steven from ODDO.
If occupying markets are healthy availability remains record low and you can sign a 7% yield on cost. Why don't you develop more? What are the constraints that you see here? And maybe as a follow-up to the same question, can you quantify a bit where you think development volumes could go for the coming years? We'll come back to the previous highs, for example.
Well, first of all, I think you say why don't we develop more? I think it stays difficult develop and to realize a 7% yield on cost in Western Europe and the 9% in Romania. That's not easy. And we think and there is still a very nice pipeline of projects, but it all takes longer instance, decisions are taking longer due to the combination that need better rents are higher in a new development than, let's say, foreseen a year ago.
And now is it going to be slowing down and people are also thinking more and thinking longer about it, will we jump or will be not jump? So it's not that we don't want to do developments. But yes, the market needs to be there. The client needs to be ready to decide. And indeed, we still buy if we can we do buy the land speculatively, but we don't do speculative developments likely didn't do that, let's say, also in the last 10 years, but there is no need to do speculative developments.
People who take time to think also today have still the time to decide. And on, let's say, the good old times come back, well, that depends on -- yes, the possibility to do acquisitions. And as we always have done, let's say, during the different movements in the cycles. More acquisitions, more developments. But let's say, we lowered our goal from EUR 500 million a year to EUR 250 million a year, but we are very confident and we are confident that we can reach the EUR 250 million. And we said EUR 250 million because we want to do profitable investment instead of just investments.
Frederic from Kepler.
Three questions on my side. First one would be, have you made an exercise on part of the portfolio that is no longer ESG or compliant to ESG standard or at least to the latest trends? And for which our retrofitting could be done with the impact of a sharp increase in rent. And I refer to the example you just gave us on the tenant, which mean, which were bankrupt. So in other term, would you favor tenant relationship or structural financial growth for the financial?
Let's say we'll always think and work together with our clients. We are not a short-term let's say, hedge fund or temporary investor in the sector, we are long term and live from our clients in good at bad moments. And let's say, it will be together. But let's say, just for example, kicking out the clients because it's not paying the last euro. Yes, we will always go in negotiation with them. Speak with them. And yes, we have to live from that. Our growth also in the last 25 years was done with existing clients.
So a client is and still is important. And together, we will reach it. But it's much more faster by, let's say, inflation and indexation is that's over the whole portfolio. That's why, let's say, okay, a little short with one tenant or one client. It's always let's say that does not change in the big figures and that client relations are and stays very...
And in addition to that, you know that we have developed more than 2/3 of the portfolio ourselves and due to the steep growth in the last couple of years in the last 10 years. So the portfolio is of very high quality. But indeed, there are a couple of hundred thousands square meters, which in the next years, it's not concentrated in any year that will come at the end of the lease. And there, there are some opportunities to upgrade and redevelop the building.
Probably most likely in partnership with the existing clients who is most likely to stay here, given the example, Joost made it in the last couple of quarters, the example of the company in the Netherlands who was at the end of their lease, and they are fabricating the big fiber optic cables for the Olympic games. And initially, they wanted to go to another continent and there the states, they want us to upgrade a great expense to redevelop the building. We have an example in Belgium too, where a tenant says I need more room, more space. I will look for a new land plots in the end, they stayed and we do a redevelopment and upgrade project with them.
In other cases, it will be because of better optimization of the volume of a building. We have a lot of volume in the building, too. That's a trend we also see that they will also start to automate there, we can also play a role because we have that knowledge so we can offer that service to our clients.
Yes. And in addition, I would say that -- let's say, those sites who are not ESG future compliance that's income generating land bank for future redevelopments and like that we mentioned in May and like we showed in May at from an old sinking building in the Port of Amsterdam. We made a perfect urban logistics hub at the higher rents for Amsterdam and on that scale we bought 10 years ago, an old flower there, we can make a new air freight transport upgrade, we do new city logistics buildings. So that part of the portfolio that is not ESG compliant, but old and ugly, I would say, or the perfect inlet or the perfect locations to do future redevelopments with adopted functions to the new function of that location. Frederic is that an answer on your question?
You have two more questions. Frederic is currently out of the call. So we'll continue with Inna from Degroof Petercam.
So thank you very much on the -- for the presentation. Two questions from my side. First one, how do you see current opportunities for land acquisitions. More -- I would be really interested to hear more on the fact on whether you start to see any distressed land thoughts coming up for sale that's are -- well, that are available at adjusted prices?
And my second question is, if you could give us a little bit more color on the investment market in Romania? And more specifically on the levels of ERVs that you're seeing there? And what indexation are you able to secure on your portfolio and leases? And perhaps a follow-on question on Romania is whether you expect that in the EUR 250 million per year mix that you would like to continue adding on whether you expect the proportion of Romania to remain roughly in line with where it is in your portfolio at the moment?
I will answer first the land question. I would have hoped to be able to buy land at cheaper prices that I mentioned the word scarcity and scarcity it's absolutely not possible on the contrary. We have seen some land positions that have been sold at even higher prices than expected, even when they pay -- where there was a tender in an element, let's say, in the middle of the country, it was due and you had to offer at least EUR 200 and you have no certainty of any availability of electricity on site, while prices spend above to and electricity. And then on that location, I would say, at those prices, you cannot develop, say, on the right news. And so we needed to have all end users who bought those lands at those high prices. So prices of land are absolutely not coming down. On the contrary, I would say. If something is available, everybody wants it.
Romania, let's say, there, that's also nothing changes, but we stay within the 20% limit that we mentioned already a lot of years. And let's say, there we are, let's say, neutral within those limits, we are neutral. And if we can do a good project in Romania, we do it in Romania, if we can do it here, we do it here.
I think you could roughly foresee that we stay within the 20% limit and that stays on the total portfolio level. As we have mentioned and guided for and in the proportion of the EUR 250 million there, it will be -- it's obviously depend on opportunities. But now as it is running right now, it's the balance between the countries, and it should stay more or less at that proportion. Unless that there is in one or the other country, a nice opportunity, then it will be a bit in the other way, but still within the 20% limits.
I think the biggest difference is that we -- until last year, we could count, I would say, almost on the Netherlands alone, and now we have to count on let's say, our three offices, the Belgium, the Dutch and the Romanian and they are doing, let's say, almost the same...
Incremental growth.
Yes. At rental levels, yes, they still are they are flat. They are, let's say, up for new development, they are also higher because there...
We have seen ERVs also in Romania for the first time, have an uptick this year in the other countries. It started already available. Now we have it in Romania, too, but they're also indexation for European indexation levels and we can pass it on to the tenant, the same as in the other countries, and that has been absorbed and passed on to the tenants.
And just to follow up on the investment market overall. Because historically, of course, it's one of the places where we have seen a limited number of transactions. Do you see any movement there in the last 6 months?
No. It's still a developer investment market with the likes of WDP, CTP already owning 50% of the market.
No. 50%. More than 50% of the market does not sell anything. So...
Then we have a next question from Wim, KBC.
I hope you can hear me fine because I'm having some Internet troubles.
Its fine, Wim.
Great. And I've been shut out for a while, so I might repeat a certain question. But my first question would be on the yield expansion. So you saw 12 bps in the second quarter. So that's a slight deceleration versus the first quarter. I think, 15 bps there. Can you quantify a little bit compared to 2 quarters where is it still coming from the same sources? Or is it maybe a catch-up in other areas? And how do you see it going into the next of the year, the rest of the year?
Well, yes, when you -- as from the peak at the end of Q3, values have come down. And let's say, the speed of the yield expansion has been a bit different in terms of the countries, et cetera. But generally, the tendency is a bit the same and that we get this yield expansion and of the yield expansion, we -- you have seen until over the last 3 quarters, let's say, 50% has been offset by ERV growth, overall more or less.
And now we have at 5.2% net initial yield for the entire portfolio, 4.8% for excluding Romania, so for Western Europe, and we repeat what we have said over the last couple of quarters that we see net initial yields in the market going towards 5% mark, and we are, let's say, close by the 5% in our portfolio too at 4.8% and with still indexation coming in and it's still upward pressure on ERV. So that's the same message we wanted to bring today. That's what we expect.
Okay. Maybe just more into the country's drill down. Last quarter, you mentioned, and I think also it was mentioned at the year-end that the Netherlands were accelerating a bit earlier because they have a more liquid market. Is that still the case that the Netherlands -- because at a certain time, that should level out and then it should...
We expect it to level out in most of the countries. They are now in the investment market, and there is no reason to have fundamental differences in the investment markets that we believe in Western Europe yields will just slightly go to 5%, which is also where the funding cost.
Okay. Okay, fine. Then a follow-up question, just some details on the solar income, I think they grew about year-on-year, about 5%, and you quantify or qualify that a little bit by balancing capacity growth with electricity prices. Can you give a bit more detail how that's going to work out into the second half? Because there -- last year, I remember you had the spike in energy prices around August, September? Is there still some potential there that it could come down a bit more? Or have they been hedged, let's say, anyway, and that is not -- that impact will not be felt?
Yes. Most of the income is either at a fixed price or the fixed price from the green energy certificates we get, and we have only a small portion that's in the Belgium portfolio, which is more linked to the spot markets and that's unhedged. So then you have a bit of volatility. But let's say, in the first half of the year, it was EUR 1 million lower than we should have expected. So it's not dramatic.
So yes, it's in percentage-wise, it has an impact on the line solar income, but not on the entire group. And that's simply because, yes, when we budgeted prices were still very high and prices came down, but also prices came down in for the short term, there is no, let's say, they were also very high as a result of the war and the energy crisis. Now they have come in a bit, but the long-term energy price forecasts are still pretty much intact.
Yes. Mick, just a last follow-up on that. So when you add new capacity, that's the timing when you actually fix the hedge in the future? Or have you already pre-hedged?
But you should not see it like that because it's not possible to hedge electricity prices like you do in the interest rate swap market. For example, when you sell the electricity, you either sell the electricity to the clients and there to the clients, we offer to the clients a reduction on the grid electricity price because we save distribution, transport and taxes. And that can be variable that it follows at a discount and the pricing gets from the grid or we lock it in for a fixed and we give the option to the clients.
So we have both scenarios there and what we inject into the grid there, we try to lock in for 1, 2 or 3 years, but it's not possible to have a hedge on that for more than 2, 3 years. And typically, it follows with the lag of the energy market than we typically have for the injection part, 1 or 2 years fixed prices, and then it converges in the end, again, to the market, unless in the future, we think we can sell a bulk to corporates wanting to buy green energy.
But do note that, that is not or we could do that for some parts of our energy portfolio, but do note that in the -- so we are ramping up our capacity to have more production of green electricity and yes, in this new ramp-up, we will have less auto consumption by the tenants in the buildings, but that's done deliberately as we want to have full rooftop capacity.
Why? In the short term, it will lead to more injection, and that's a bit more variable. And a bit at the lower price, but that's done deliberately because the transport of our clients is electrified have when we have a building, a normal logistics operation is not that energy intensive. But then, for example, the transport of the client electrifies, and I'm not talking about the cars, but the vans and the trucks, then the electricity consumption goes at least times 3.
And we want to be ready to capture that and to be ready to offer that service to our clients because we are now working on pilot projects with truck charging, et cetera. But then it's a competitive advantage to also have the electricity. And so that's what we try to accomplish and when we can then sell behind the meters we say to the clients, we can achieve a much better price than injecting even though it would be then broadly variable.
Yes. No, no, that's interesting, especially when the grid is getting saturated. Well, thanks a lot, very clear.
Paul May from Barclays.
Just one quick one from me. You mentioned in the statement that it's getting -- or it remains challenging to achieve target returns on investments despite cost stabilizing and in some cases, coming down. Just wondered what it is or how you're looking at funding investments moving forward? Obviously, stock trades where it does, at a big premium to your asset values? And do you see that as an attractive source of funding? Or is debt capital, as you say, a sort of 5% plus cost still attractive given the higher yield on cost on your project? Just wondering how you're thinking about funding sources moving forward?
Nothing's really changed there. We will continue to do what we've done in the past, having a prudent balance sheet and a good debt-to-equity mix. But as we already stated, it's also in the presentation, we will fund maximum 50% of our debt of our investments with debt minimum 50% with equity. And of the equity part, which is indeed, the equity is our marginal cost of equity is almost similar than the marginal cost of debt. So indeed, that's a trade-off we need to make.
But note that, for example, you've seen what we've done last year within -- we have a good balance sheet position. We have a net debt to EBITDA of only 7x, and that is also each year coming minimum EUR 150 million of equity into the -- staying into the company through retained earnings and scrip dividends. But for example, when Joost is saying, we could see a bit more investments in -- on the acquisition front. Then we would be happy if that would be funded through a contribution in kind, for example, that will be the preferred route to fund an acquisition, for example, so that its earnings neutral and reinforcing for our balance sheet, but that depends a bit on opportunities.
Cool. I just, I suppose, when you say no change, there has been quite a big change in the market, and that's why I was just wondering, it's surprising that from your side, there's no change in your thought process particularly as you say that given the marginal cost of debt and the risks that come with that are broadly the same as the marginal cost of equity.
But I fully understand your question, but I think we have made that change already last year. To give you -- change last year -- yes. But you can see we have a look at what we have invested over the last 12 months and our net debt has not changed. Over the last 12 months compared to 30 June last year. So we have funded in the last 12 months, everything with equity.
Yes. Sorry, just had a...
So we already need -- that's...
Already moving along that path? Sorry, just one quick one in coming from a client actually. How are discussions on secured bank debt moving at the moment? Is that available? And what sort of cost and margins? Would that be available?
You mean unsecured, I hope. It's talking about unsecured finance. No, no. Just to be very clear, in the last couple of weeks and months, we have received some questions on our negative pledge loss. We have a negative pledge loss in our bank and bond documentation that we do not provide any mortgages or pledges or whatsoever because as the core strength of our funding model is that we raise all debt at the level of the group, senior unsecured everybody fully aligned, fully aligned covenants and that allows us to be very efficient, very flexible and allows us to be -- have a very diversified debt book and have very good access and fast access also for the big amounts. And we know that in the market, some players are experiencing some difficulties with the balance sheet or access to funding and that they are turning more towards the secured lending market, okay.
That is then an opportunity for strong players to access funding in a good way. But I can assure you, we can still have a very good access to unsecured lending the way we have done it already for many years. And of course, today, tapping the European bond markets would be -- that would be too expensive. We all know that, that market is extremely difficult. It's always open the market at right perhaps, of course, but we do not need it today.
And for example, for the refinancing, we do it with the traditional lending banks, there we see no big change in pricing and a lot of support from our lending banks. We are not only reliant on the Home Benelux Lending banks. We get -- we talk a lot with international banks, international investors, we even get for unsecured lending reverse inquiries. So we are not concerned at all about access to unsecured lending. That's what we've been trying to do, establish over the last 10 years. That is one key word, diversification. Diversification, and we can also now use our good credit ratings to continue to have that good access. So we -- baseline is, yes, we have good access to unsecured lending at decent pricing.
Okay. Are you able to share...
And yet we have also EUR 1.5 billion in undrawn credit facilities.
Yes. Are you able to share on what the margins are today versus, say, 12 months ago? On the unsecured broadly.
Let's say, for marginal year 10, 15 bps for traditional bank lending.
Okay. So the high 100s now or sort of mid-100s as a sort of spread?
High 100s.
High 100s. Cool.
We have some questions in the chat from Fred, but seems that you're back in the chat. So Fred, you can ask them.
Yes, I'm back. Sorry, I was out since I had the same provider on Internet. Just two questions. So maybe could you split the revaluation loss between the portfolio revaluation and the development gains? Because I saw that you deliver some asset in H1? And then maybe could you comment on your strategy today in France and Germany, it seems that you're still, well, relatively quiet in the development process? Just wondering if you have seen some land, which could be cheap there and on which you could make a potential breakthrough in the country in the future? Anything would be useful?
Yes. On the development gains, we've shown around 20% development gains, which is consistent with the yield on costs you saw and the valuation yields on the portfolio. And then you...
Yes. On France, Germany, let's say, there, we are still open there. And we still want to invest in those countries. But let's say, as markets were closed, they were also closed in Germany and in France, I said when it was kicked out, then indeed land prices are not coming down on the contrary. So still open, investigating and, let's say, by markets reopening. Yes, we see probably some more possibilities in Germany and France, but let's say, we still have to wait for the final pricing. But yes, we are still open. And if tomorrow, we can do a good development or a right acquisition. We will do it in both countries. And let's say the strategy has not changed. We just have to be careful and to contrast.
And just to come back on that two follow-ups. Do you think you need to invest more in your local teams? Because you've seen several other or some of your competitors investing in their teams upfront. Is it something that you need to do? Or you believe you have the right partnership today in Germany to continue and in entrance as well? And the second question, you said that land price not going down or you don't see evidence of it going down. And I'm just wondering how is it possible in a world where the cost of funding has gone up to the roof?
For the lands, there is one word scarcity. And let's say, even and there is more than developers, they are end users, they are end investors. So -- and they can -- they are thinking and counting, making a different calculation. So -- and it is not because we cannot develop profitable on a piece of land that it cannot be interesting for an end user, so that's different. And there indeed, yes, because of the scarcity and all of those threats, let's say, in certain regions that they don't want new industry zones or they don't want new logistics and those things basically see.
In Netherlands, let's say, makes that land stays where it is at least. And then concerning the teams, you can say there are, let's say, two strategies or we go for the team first and then you go for to try to do projects. But we say we have very good teams in the Netherlands and Belgium. And let's say, we do Germany with one German business development supported by the Dutch office of which fact some of them have, let's say, experience in Germany and living very also close to the German frontier.
France is done from here from Belgium also with some French speaking colleagues. And we have always been from the principal do flourish our investments and then build further the team instead of just building up first teams and then doing investments.
Okay. And maybe a last one for me. Could you give a bit more detail on the partnership you have today with [ Kassalow ] and is it something you see more and more with the end user going through partnership?
Yes, I think there we have -- that's an end user also having a very nice activity and a very good track record and also a loan portfolio and they are used to developing themselves. But we got to know each other and help each other. And then we -- in the end, we said we can reinforce each other, and we can accelerate faster with us, and we can also participate to these projects and put our knowledge together. It's a way for us for in the -- specifically in the Belgian market, where the market is more than 50% held by owner occupiers to also take part of our participates in that older occupier markets.
And we have identified with them a volume of EUR 100 million of projects in which we will take a 25% stake with the potential, but that depends also on our partner, of course, in the future, for example, do a step-up acquisition and offer liquidity to our partner when they would have other opportunities in their business or would want to sell down part of that portfolio.
This one, for example, is really because it is a very interesting micro location, just near Antwerp where you cannot enter, let's say, without them and together, we can do it. And then let's say you are on the table, and then we can hope that by working further together that we can indeed see it as a step-up acquisitions.
Yes. But we only -- as you can see, we can only -- we only do it when there is a reasonable volume in that JV of minimum EUR 100 million when there is a strategic angle here close to the fourth like Joost mentioned, that is how we -- what our reason is, obviously, our main business for all clarity will stay to be the full owner of projects. It's not that it's expected to become disproportionate in the entirety of the VIB. But as Joost mentioned, the -- it's a 5 for profitability, and we need to be smart, creative and there, that's the way forward.
It's an add-on on our existing business. It's not our new core business, but its add-on. It's an extra that otherwise would be not open for us.
Marc from Puilaetco.
Yes, thank you for the presentation and the very clear answers. If the market gets open and you start buying again, are you targeting a portfolio or other individual buildings?
We are targeting interesting things, Marc, like we always did, and that can be individual things and that can be portfolios. It all depends on the opportunities.
And I suppose you are rather looking to Germany and France?
As for us, I'd say, in one region that we -- if there is some interesting in the Netherlands, in Belgium, in Luxembourg, in Germany, in France, in Romania, there are the countries where we are active. There, we are looking for interesting things. And if something is interesting, and we do it, wherever needed.
It will depend on opportunities. But you're right, it would be a plus if it could be, for example, in France or Germany so that we could ramp up the activity and then further invest, for example, in a team and when we have -- they'll be able to build critical mass, but only when it's profitable, of course.
Inna, you had a follow-up question?
Yes. Just a follow-up question on expansion in France and Germany. Would you consider joint venture structures, again, like similar to what you had with VIB in place with a local partner, let's say, in either of the geographies?
We would prefer, of course, to be full on. But if there is really a good reason to do that, like we said here, its an add-on, but we should like if we can choose, let's say, we should like to have first a good basic portfolio on our own. But never say that.
At this moment, this currently concludes our Q&A session. So I will turn back the call to Joost.
Okay. Thank you all. And I said we are ready for September and we hope to see you all at our Institutional Capital Markets Day on 13 and 14 September. Between on the roads -- between Rotterdam and Kent. And I would say I'm referring to the presentation, thanks to scarcity we can speak about, and we will show you multilayer buildings, automation, energy, redevelopments and other fantastic states about the future of logistics real estate. And top of the bill we will be able to taste our brand-new WDP beer at the end of our 2-day journey brewed in our own warehouses. So as that reshoring, stay-shoring or local-shoring, it's up to you to make your choice by September 14. And in between, enjoy yourself.
Thanks a lot. .
Thank you. Bye-Bye.