Edited Transcript of IGD.MI earnings conference call or presentation 4-Aug-22 12:30pm GMT

Q2 2022 Immobiliare Grande Distribuzione SIIQ SpA Earnings Call Dec 7, 2022 (Thomson StreetEvents) -- Edited Transcript of Immobiliare Grande Distribuzione SIIQ SpA earnings conference call or presentation Thursday, August 4, 2022 at 12:30:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Andrea Bonvicini Immobiliare Grande Distribuzione SIIQ S.p.A. - Director of Finance Division * Claudio Albertini Immobiliare Grande Distribuzione SIIQ S.p.A. - CEO & Executive Director * Laura Poggi ================================================================================ Conference Call Participants ================================================================================ * Dario Michi BNP Paribas Exane, Research Division - Research Analyst * Davide Candela Intesa Sanpaolo Equity Research - Research Analyst ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Good afternoon. This is the Chorus Call operator. Welcome to IGD's conference call presenting H1 2022 results. (Operator Instructions) Let me now turn the conference over to Mr. Claudio Albertini, CEO of IGD. -------------------------------------------------------------------------------- Claudio Albertini, Immobiliare Grande Distribuzione SIIQ S.p.A. - CEO & Executive Director [2] -------------------------------------------------------------------------------- Thank you very much. Good afternoon to all of you. As you could see from our press release this morning, the Board of Directors approved H1 2022 results. I am sure you received all the relevant documentation or results presentation that I'm about to walk you through. Let's start from Page 3 in the presentation. Let me, by way of introduction, say something. In the first half, it was not an easy half year. And as IGD, however, we had a prompt action to the existing backdrop. We have the beginning of the year with a peak of the Omicron variant in Italy, and not only in Italy, in all of Europe, end of January, beginning of February. That was the start of the war in Ukraine. And all that was accompanied by an exponential growth of inflation, energy costs and the like. So definitely not a favorable backdrop. And I'm sure IGD reacted well to it. And if we move on to Page 3, let me highlight how the first 6 months went. So physical retail as far as we are concerned, was lively and in good health. And tenant sales went up during the first half of the year, especially in May. May was the best month always if we compare it to 2019. And June was basically flat versus 2019. And that leads us to say that we've almost fully bridged the gap vis-a-vis 2019. Tenant sales are minus 2% versus 2019, minus 2%. Then there was a good leasing activity. We have a good upside data for both Italy and Romania. Occupancy increased, went up, so there was a trend reversal, 0.3%. And we, at the same time, complied or followed the lines we outlined in our business plan looking for new brands, et cetera. And I'll tell you more about it as we move on. And then we went back to organizing in-person events starting from April, and that indeed was a boost for footfalls, but also for tenant sales and then financial indicators are all with a plus sign before them. And our equity story is reconfirmed, and it's fully focused on a dividend yield being confirmed in full. And if we move to Page 4 in the presentation, I can walk you through the highlights. The first 3 indicators. And so the financial net rental income for the financial indicators landed at slightly more than EUR 57 million in absolute terms. Half year on half year, they went up 2.9%. But if we consider that at the end of November 2021, we disposed a portfolio of 6 hyper and supermarkets. I am -- we are also offering the like-for-like restated growth that would have implied a much more market growth, that is to say up 16%. Core business EBITDA from rental business, and it's about EUR 52 million and up 2.3% in absolute terms, but on a restated basis, up 14.6%. Same thing applies to funds from operations, landing at EUR 34 million, up 11% versus H1 2021. But we have to factor in that we had a EUR 4 million contribution of -- EUR 4 million from the disposed portfolio. In that case, the growth would have been about 31%. Market value, real estate market value is practically flat. And we can say after 2 half years that we have a stabilization of our value appraisals is EUR 2.143 billion and fair value on fair value, we would be up 0.84%. Former NAV, it's now EPRA NRV now is at EUR 10.7 per share, down 1.1%. But please bear in mind that in May, we paid a dividend of EUR 0.35 per share. So that decline had been fully foreseen that will improve in the second half of the year. Let's now move on to more operating data. We've almost entirely bridged the gap with 2019 when it comes to tenant sales shopping centers Italy. I gave you the measure before, it's down 2% in H1 2022 versus H1 2019, but it would have been up 30.5% H1 2022 versus H1 2021. And please remember that some stores were closed in our shopping centers in the meantime. So in the first half, and it's interesting to note that there was a strong improvement versus the first quarter -- second quarter versus first quarter. So we have expected minus 9%, we had instead up 3.5%, driven by a very positive May, up 12%, and basically flat month of June. Footfalls still have a minus sign before them, minus 18.5% in H1 2022 versus H1 2019, but it would be a positive sign if we compared first half of 2022 to first half of 2021. And we have less footfalls, but they are more targeted. It's not that we lost footfalls. We have visitors, people, who go -- the same visitor who go there less frequently -- who go to the shopping centers less frequently. But from January with the Omicron peak, down 22.2%, that was the footfall -- and it's down to minus 15.4% at the end of June 2022. Same applies to July, a couple of percentage points more probably. Let me now move on to Page 7. We have witnessed a lively retail business with increase in our vacancy to date, 10,600 square meters in the first half. But we've remarketed more than that in excess of 13,000. So the new occupancy is up 2,600 square meters. We've focused on marketing certain categories to certain -- that we had outlined in our business plan, so it's household goods. Let me give you a few examples in a couple of couple of shopping centers. The restaurants in new format, it's not the typical self-service, but we're always looking for new food formats that could be more appealing. And then services, we have a first example of car sharing in one of our shopping centers, and it was in Ravenna. And then we are looking for more and more appealing brands in the clothing business, which is still the most widespread product in our shopping centers. Let me move to Page 8. That's our main project in the pipeline and it's Officine Storiche, as you well know, in excess of 6,000 square meters of GLA devoted to both retail and entertainment: 21 shops, 4 medium surfaces, one entertainment area and one fitness center. And the fitness center is due to open in January 2023. So actually before the formal opening of Officine Storiche which is delayed for some delays in the marketing of surface and also in the actual preparing of the new areas and stores. So it's going to be in the -- probably in Q2 2023. So Page 9, we keep focusing on remodeling projects. Many projects were running in the previous years. We reduced hypermarket surface to leave room for new stores and new areas in the shopping center, new product categories and then Portobello, 3 medium-sized surfaces already marketed. And then as we see, you can see work in progress in Palermo and Catania with marketing times that somehow were delayed to the second half of -- postponed to the second half of 2022. The hypermarket despite the remodeling, and I'm on Page 10 now, you see the hypermarket still proved to be a very attractive anchor. Coop Alleanza is our main tenant and is investing a lot to refurbish, renovate its hypermarkets. We have 2 shopping malls where the hypermarket was renovated. Centroborgo in Bologna and La Favorita in Mantova and then another one is work in progress. It's Leonardo in Imola, where we are planning to have a far-reaching restyling exercise of the shopping mall as well. But what I would like to underline is there are -- really, we are seeing a good performance of hypermarkets with a plus sign with a 3% -- up 3% of sales in June 2022 versus June 2021. Let us now move on to Page 11. This is our digital strategy. We have a digital plan. We are investing more and more. We are investing resources and not only that, you see we have new digital totems that are being installed in our shopping centers. They have more than doubled versus last year. We now have 134, about an average of 5 totems in every shopping center, up 127%. More events, in-person events, as I said before, with a strong focus on children, families and that, again, is in line with our business plan and a stronger cooperation with tenants. You see a pilot project we now are running together with Kiko Milano and our CRM called Area Plus. In the following slide, you can see we've already informed you during the first quarterly report, we have a co-marketing project with Coop Alleanza. It's a one-of-a-kind project. It's a very close cooperation between the manager of the shopping mall and the manager of the food anchor. We will have more than 1,000 online newsletter, 800,000 door to door flyers, 12 malls will -- we own the mall and it's managed by Coop Alleanza. We will have 12 malls advertise with 17 programmed outputs. And there's a greater and greater cooperation between hypermarkets and shopping malls to try and capture as many visitors as possible and have them subscribe to our Area Plus so as to be able to increase the number of contacts. That's where we will be unfolding and rolling out our digital strategy. Next page. Good commercial performance. Occupancies in excess of 95%. We are very close to full occupancy. We still have to grow, but there's an upside here to be noted, up 2.5%, 62 turnovers and 51 renewals. So the leasing activities have a 2.5% upside. And so collection rate is in excess of 90% in Italy and even in Romania, data are positive, even though the first one, the occupancy is down 120 basis points. But please bear in mind that we've already marketed 3,000 square meters of occupancy in H2, will go back to pre-pandemic levels in excess of 95%. Here too leasing activities have an upside of 3.5%, 69 turnovers and 118 renewals. So slightly higher upside than we have in Italy. We are also pursuing our sustainability plan, which is fully embedded and integrated into our business plan. And here are some of the results we have achieved over the first 6 months of the year. So it's g.r.e.a.t the acronym. Green, we've signed a preliminary agreement to roll out further photovoltaic systems. We would like to have more right now where we have very high energy cost. We've invested a lot, but we will invest even more in the coming years so that our shopping centers are more and more independent and not affected by energy cost increases. And then we have Bio Safety Trust Certification renewed in 7 shopping centers. Our ISO37001 Certification was also confirmed for the anticorruption partner following the surveillance audit. And we have a restarting happening and revamping happening in 4 shopping centers. That means also plans -- lighting systems are being revamped. And then, of course, local communities are more and more involved in shopping centers. Let's move to Page 17 now. I told you that the fair value -- portfolio fair value growth on a like-for-like basis is up 0.84%, thanks to the cash flow improvement. And then we have appraisers who are confirming that. And we see a revised interest in Italian real estate for the different asset classes, but for the retail. I said millions, let me correct, you know it's billion. So first half is EUR 6.1 billion and doubled versus H1 2021, and the retail data are better, but we are still very far from the level of the good years. We are about EUR 0.5 billion, up 118%. With reference to IGD's market value, we are on Page 18 and 19, you see how our market value is broken down, and you can see a decline of the weight of hypermarket asset class, accounting for about 19%. So declining, as you can see on the following slide, Page 19, versus end of 2021, thanks to the remodelings we are performing. And until not very many years ago, hypermarkets accounted for 30% of our total portfolio. So disposals and downsizing led us to being below 20% when it comes to hypermarkets. Net initial yield, you will see it were calculated with EPRA criteria. In the first half, we invested about EUR 10 million in the total portfolio, including a real estate holding -- a minority holding in a company is EUR 2.2 billion, practically stable, flat versus 2021 full year. In the next slide, you see a bridge on IGD's portfolio, excluding the real estate holding goes from EUR 2.140 billion to EUR 2.143 billion. It's basically flat with the shopping mall asset class growing versus the hypermarket asset class that is declining to -- from 19.8% to 19.1%. And then restyling in progress. Page 20, La Favorita in Mantova and here, it's a shopping -- it's a dominant shopping center as we like to define them or as many analysts like to define it. It's a total restyling of malls, facade and parking area and end of work is Q3 2022. And we will be performing a total restyling of the mall also at Portogrande, and end of work end of 2023. And as I said at the beginning, Centro Leonardo in Imola in the province of Bologna will be a restyling, following the restyling also made by Coop Alleanza on the hypermarket. We have Design International based in London who will be doing the full restyling of the shopping mall, start of work 2023. Excellent results were achieved in Livorno as well from residential sales viewpoint. Porta Medicea that's the name of the project. Yesterday, we got the info about 28 proposal. Out of 42 residential units, 28 have binding proposals signed. So we are more than halfway to the sales. The flat -- the apartment will be delivered end of September with a notary deed by year-end and a cash-in of about EUR 10.6 million within the year. So we hadn't included the 28th unit, but it's EUR 10.611 million. And if we drill down to a greater level of detail, let's have a look at the net rental income and operating results. We are showing both growth in absolute terms and the orange one, we strip off the disposed portfolio that's this. And then on the third column is a restated figure. In absolute terms, net rental income, we grew slightly less than 3%, EUR 1.6 million. But if we look at it net of the disposed portfolio and on a like-for-like basis, we grew 16%. So on a like-for-like basis, it's up 2.1% and 1.6% shopping malls in Italy and 2% is driven by hypermarkets. On Page 25, we have the EBITDA. EBITDA and EBITDA margins. We have the same breakdown. Our growth in absolute terms, and we strip off the change in perimeter, then it's 14.6%. It's mainly a growth from rental. In fact, the EBITDA margin is up 4 percentage points from 66.3% to 73.3%, and just a little more on the freehold side from 66.6% to 73.3%, whilst the EBITDA margin was 66.3% to 71.3% in 2022 to be precise, sorry. And if we look at the net financial position, net financial position led to an improvement in our financial management, which is down 15.3%. The main effect is the one I just described, but is also a decline in the average cost. An improvement of about EUR 2.4 million of our -- the cost of our financial margin. FFO, funds from operations. Again, here we have absolute value from EUR 30.6 million to EUR 34 million but if we strip off the EUR 4.6 million of the disposed items and then the change in contract from Master lease to management fees, you see it would have been a much stronger road, up to 31% almost half year on half year. Let's have a look at the EPRA indicators. We closed the year with an NRV of EUR 10.85 per share, EUR 0.31 FFO decline of -- a reduction of EUR 0.35 because of the dividends that were paid out in May and EUR 0.08 of real estate asset fair value in the negative from financial influence and other. So we end up with a decline -- marginal decline to EUR 10.73 end of June, which we think we will recoup in the second half. As to the liability management activities, I'm sure you received -- yesterday you received our press release about this loan that was granted. Senior unsecured loan is the first green loan in IGD's history, EUR 215 million, but that was not the only thing we did in the ALM. In April, we repaid -- we've always complied with maturities. We repaid at maturity EUR 154 million with the available cash. In May, we renewed 2 committed facilities, not revocable ones, for a period of 3 years with 2 primary banks, one is EUR 20 million in May in the second one last month in June for EUR 40 million. So we have EUR 60 million committed credit lines, which for us is a reassuring buffer. Plus we have the green bond -- sorry, the green loan -- senior unsecured loan, EUR 215 million, enabling us to reschedule our debt -- restructure our debt and extend our maturity profile. So EUR 215 million from here to 2027, it's a loan, a 3-year loan plus we have the option to extend it for 2 additional years, 1 and another year, 1 plus 1. So we've already put the final maturity. And with this transaction and others that we are focusing on right now, the flow we will be generating in the second half, we can say that our financial needs for 2023 are fully covered, almost fully covered. I could say -- I could remove the almost, but I like to be cautious. So let's say that now we are focusing on 2024 maturities. As always, we would like to have an early refinancing of those maturities as well. Let's take a breath of fresh air in summer holidays and then together with our finance department, we will -- we have 2 bonds expired and then a private placement in EUR 100 million. Expiration date maturity is January 2024. We're not particularly -- we have no particular concern about that. And another one that is not concerning us, it's EUR 400 million. It's a bond with a 2024 maturity -- October maturity. So 2 years from now, practically. Let's go back into a greater level of detail for our net debt. You see net financial position for full year to H1 2022. Loan-to-value goes up slightly because we paid dividends, but it will go back to below 45% by year-end. It's a growth effect we have envisaged in second half because of the payment in the -- in Q2 of dividends. ICR is improving. It's 3.74x. And average cost of debt, as I was saying before, the decline in the financial management is mainly due to the decline -- reduction in the debt stock. But the -- that led -- what I've just described led to an average cost of debt slightly below 2.1%. Let's now look at the outlook. If you remember, in February -- 25th of February, we presented our full year 2021 and told you a guidance -- gave you a guidance for 2022, where we had estimated a range 9% to 10%. That scenario -- the scenario that has affected the entire first half of 2022 and unfortunately, we do not see any improvement coming in the second half or the macroeconomic scenario in Italy -- we are sorry to make our life -- well, in Italy apparently, we like to make our life harder. We have political uncertainty, social and political uncertainties, we will have elections in September. And then there are a number of more specific issues. We have some projects that have been delayed. They were in the pipeline, but they have been put off and then some suppliers for those who have to open up new stores and also fit-out of stores. So the opening times were extended and there is a delay there. So the 2 combined effects make us be very, very conservative. And I hope I will be proven wrong when we will present the full year in February next year. So our guidance goes from 9% to 10% to 2% to 3%, a sizable decline. However, bear in mind that if we were to provide a guidance, taking restated figures into account, that 2% to 3% would be on a like-for-like basis 17% to 18%. So -- but in absolute terms, we go from 9% to 10% to 2% to 3%. I think that's it from my part. On Page 34, you see the next -- the agenda. On November 3, we will give you the results for the first 9 months of the year for Q3 and I hope we will have a -- let's hope we will have a clear picture on how the year will end. And then we have an IR agenda as well, starting from September, we will be attending the EPRA Annual Conference, as always, in Paris. On September 7, we will be attending the Italian Sustainability Week, and we were invited to that. And then we have -- on the 11th of October, we will be meeting for a conference by Intesa and then another by Exane on the 16th of November, always in Paris. And I'm here with the colleagues from the headquarters and not only, and we are ready to take your questions. Thank you very much. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) First question comes from the line of Davide Candela with Intesa Sanpaolo. -------------------------------------------------------------------------------- Davide Candela, Intesa Sanpaolo Equity Research - Research Analyst [2] -------------------------------------------------------------------------------- I have a couple of questions. The first one is on the guidance revised downward for this year. I was wondering whether for the second part of the year, you are assuming delays or are you being prudential and cautious as to the possible trends of consumption, meaning end-user transit consumption because it's quite a challenging backdrop also because of inflation. So will that -- and say maybe discounting or rebate you'll have to grant tenants because the situation might become even more challenging for them too. So in the guidance, do you have those kind of very prudential assumptions? And then CapEx or investments for the year, could you quantify the investments that you will be making postponed to 2023, so to say. And then a question on debt refinancing. Could you elaborate on the cost of debt and the strategies that you are going to adopt for debt refinancing in 2024? If we assume a flat -- I mean, an interest rate scenario that is either like this or worsening next year. -------------------------------------------------------------------------------- Claudio Albertini, Immobiliare Grande Distribuzione SIIQ S.p.A. - CEO & Executive Director [3] -------------------------------------------------------------------------------- Let me answer the first question, then I'll ask the colleagues to help me answering the other 2 questions. After the guidance, we -- it's mainly postponements of opening. It's not that we've lost revenues in absolute terms. They're just postponed. Officine was due to open within the half year. We are putting it off. We are postponing it to March 2023, but we will open. And this slippage, this delay will enable us to get to a very high level of occupancy with top tenants, primary tenants, premium tenants. We are about 75% to 80% of coverage. And even for other openings been planned for this year, we have signed contracts because occupancy is computed, is based on site content. Of course, stores open, but also stores for which we already have contracts. But unfortunately, for the bottleneck of deliveries, the fit-out of stores, we had to extend the opening times to put them off. So it's going to be between Q4 2022 and here the -- sorry, from here to Q3 in 2023. So -- and rents will be paid out from the opening. This is what contracts cater for, but also the vacant and vacant areas, we have to pay condominium fees. So that's the main assumption plus other costs. We have -- we are investing because we know the backdrop will be more challenging, but we are investing a lot in marketing. Second -- well, Q2 investment, we started that when we started. But for a number of -- we will have a number of marketing initiatives. And despite the challenging backdrop, everyone is wondering what's going to happen between September, October. It's like the end of the world, but it's going to be a challenging backdrop. So we are investing a lot in marketing activity. So if you put together all these different pieces. Plus we revised our guidance, revised that as well. But let me remind you that it's still a positive trajectory. You have to compare it to the existing scenario. The scenario has worsened massively in the meantime. And the Russian and Ukrainian war worsened the scenario that was already quite bad. So energy costs have exploded. And all of that makes us want to be very conservative. And maybe somebody tells me you were too cautious, too conservative. But in our track record, IGD always done better than the guidance we've provided. So we'll see in February what happens. And as to investments and debt refinancing and over to Andrea Bonvicini, who will let me -- with 2.1208, it's a level that's easy to maintain over time. We cannot give you disclosure of the cost of debt because banks have prevented us from doing it. It's a very competitive cost, better than the loan and financing we closed. But IGD still has a strong reputation in the banking world. That's why we want the banking route. As to investments, I'll answer. Hello Davide. On investments for the reasons that were explained by Claudio, we had a slowdown -- slowing down and somehow it was technical management as well to maximize some projects and improve some work in progress, so to say. We are basically confirming about EUR 40 million worth of investments, slightly less, meaning where you should be able to recover part of what we had planned over the year, we should recoup in the second half with some slight postponement to 2023. As you've seen, the main projects are confirmed, and that is the intention we have. So we have to maximize and optimize the existing work in progress and the existing projects. -------------------------------------------------------------------------------- Andrea Bonvicini, Immobiliare Grande Distribuzione SIIQ S.p.A. - Director of Finance Division [4] -------------------------------------------------------------------------------- On the NSP and the refinancing of our debt. You've seen we came out with our first unsecured green loan with a pool of banks, we are looking into another financing for about EUR 23 million. That we will underwrite and then after the summer, we are looking at the market. We have no specific needs. There are different options out there and we'd try the green bond way. And in autumn, we will have a sustainability-linked bond as well. We'll look into sustainability-linked bond as well to refinance the maybe 2024 maturities. And then there might be an exchange through a tender offer. We don't know -- we have had expressions of interest for private placements with U.S. and European investors. And as you saw in the annexes, we have unencumbered assets worth EUR 1.5 billion also for secured transactions, either in pool or syndicated transactions. And then we have the convertible instruments that is always there available for us to use. And we will move in between these transactions around the transactions to protect our average cost of debt, which will probably slightly increase, but not so much within this year. But then, of course, it will very much depend on what the market will do, will be like. But at least we hope that we will have better conditions versus what we could get at the beginning of this second half of the year. -------------------------------------------------------------------------------- Operator [5] -------------------------------------------------------------------------------- Next question comes from Dario Michi with BNP Paribas. -------------------------------------------------------------------------------- Dario Michi, BNP Paribas Exane, Research Division - Research Analyst [6] -------------------------------------------------------------------------------- And I have 3 questions. The first one is on -- could you give us some -- could you elaborate on the rental delta you got from these additional rental spread, rent spread? -------------------------------------------------------------------------------- Unidentified Company Representative, [7] -------------------------------------------------------------------------------- Yes. We have an upside. We showed you the upside. Laura Poggi can answer that. -------------------------------------------------------------------------------- Dario Michi, BNP Paribas Exane, Research Division - Research Analyst [8] -------------------------------------------------------------------------------- And the impact of rates on the appraisals of your assets, and are you going to engage into more disposals? -------------------------------------------------------------------------------- Unidentified Company Representative, [9] -------------------------------------------------------------------------------- Sorry, but had an echo, and I could not hear perfectly well. On the financing, we had an upside of 2.5 on the -- in Italy and now also in Romania. That was the upside on the rental, on the new rentals, yes, yes. Would you like to add something, Laura? -------------------------------------------------------------------------------- Laura Poggi, [10] -------------------------------------------------------------------------------- Yes. Upside of 2.5 and also let me remind you of the remarketing, the strong remarketing work we did. As you can see in the paper, in the presentation, we had a vacancy of about 10,000 square meters in the half, and we recovered more than 13,000. So that's a good sign also from that perspective. And then the valuation at fair value, the appraisal at fair value, the appraisers have already looked into that. They were very, very cautionary in their appraisals. Fair value on fair value, like-for-like basis and it's -- 84 is the real situation. Again, I apologize, but there's a lot of echo. So there are -- you can see the positions taken up by the 4 appraisers over a 10-year time span. First of all, lowering the potential inflation over a 10-year time span, that produced an average of -- an average increase of 32 basis points. That's it versus a real one that is 500. But this 32 basis points -- those 32 basis points were somewhat offset by the increase in WACC on -- for each appraisals for the value of 31 basis points. So talking about retail where inflation apparently seems to be having a positive effect on rental contracts or rental lease contracts. But it may lead to an increase of occupancy costs within shopping centers. So it was not taken into account. At year-end, we have to check the real inflation rate, the outlook for inflation and the inflation on products sold by tenants, how that will -- to see how much tenant sales will be able to increase because, of course, the ratio is always rental fees paid versus tenant sales -- on tenant sales. So, so far we take a snapshot end of June 2022, that was fully offset. The inflation effect was fully offset. We'll see what happens for December. We'll have to look at a real economy and what will happen to real economy after the impact of inflation. -------------------------------------------------------------------------------- Dario Michi, BNP Paribas Exane, Research Division - Research Analyst [11] -------------------------------------------------------------------------------- A question on disposal. -------------------------------------------------------------------------------- Unidentified Company Representative, [12] -------------------------------------------------------------------------------- We have no specific novelty to share, except that for Romania, we've had some expressions of interest, but not in concrete yet. On the hyper supermarket portfolio, there's a tail in the disposed portfolio, about EUR 40 million. We have some -- we're not yet at the level of binding offers on the table, but the third group of disposals is about non-core assets. So in instance, Livorno, however, is still being appraised. So it's about EUR 20 million. We have not yet entered into any specific negotiations. Well, for the first 2, I mentioned, especially the second one. We have some expressions of interest. And let's hope that in the first half of 2023, especially on the residual hyper supermarket portfolio, we'll be able to tell you or to disclose some kind of transaction that we will have be -- will have entered into, sorry. -------------------------------------------------------------------------------- Operator [13] -------------------------------------------------------------------------------- (Operator Instructions) The next question is a follow-up of Davide Candela with Intesa Sanpaolo. -------------------------------------------------------------------------------- Davide Candela, Intesa Sanpaolo Equity Research - Research Analyst [14] -------------------------------------------------------------------------------- I have a follow-up on disposal and asset rotation. Could you -- should the macro backdrop not get so much worse and if you were to succeed in disposing of the assets you have in mind, do you have any specific assets you are doing some scouting for? And what would be your strategy in that respect, what would be your focus? Would that be a focus on new shopping centers or would that be a geographical forte or an appraisal focus, repositioning focus? -------------------------------------------------------------------------------- Unidentified Company Representative, [15] -------------------------------------------------------------------------------- In the business plan, we have included -- we have presented, sorry, does not entail assumptions of growth through acquisitions financed by disposals. If we make disposals, that's positive because one part, if we manage, if we succeed to complete the disposal, we're talking EUR 180 million to EUR 200 million. The priority will be given to improve our loan-to-value, that's for sure, because we have improved our loan-to-value sizably between 2021 and 2022, thanks to the disposals we have completed and 2 other factors as well. But our business plan want us to land at the end of the business plan a loan-to-value between 40% and 43%. Now we're slightly above 45% that because we've just paid out a dividend. We will go back to being below 45% by year-end on a like-for-like basis. But the idea is to get to 40% -- maybe we won't get to 40%, but close to 40%. So the first use of proceedings, if we were to complete disposals, would be improve or better reduce our loan-to-value. And then the remaining part, if you were willing to invest, there's a lot of opportunities out there. There are a lot of sellers and buyers out there. There are lots of opportunities, but we are not interested in focusing on any capital transaction. It's a green that we'll stay locked up in a drawer so far. But if magically we were to take home EUR 200 million, maybe half we could devote it to reduce our debt. And the other half, maybe we could think of acquisitions. But let me remind you that our business plan entails EUR 80 million worth of investment for restyling, remodeling, development of Livorno, CapEx in the ESG arena. So it's not that we are talking a few million. We're talking EUR 82 million for the size of IGD. It's not little money. But right now, we are mainly focused on the existing portfolio. We want to improve it, make it more and more appealing, but not by making more acquisitions. We would not have the resources to perform those acquisitions. But if we are lucky enough and we have the ability, for instance, to take up a lot of cash facilities maybe first, then reduce our debt and then maybe we can think about what we can invest in. But our priority, we don't have any priority, geographical priorities. For sure, we won't be investing aboard. -------------------------------------------------------------------------------- Operator [16] -------------------------------------------------------------------------------- (Operator Instructions) Mr. Albertini, there are no more questions in the queue. -------------------------------------------------------------------------------- Claudio Albertini, Immobiliare Grande Distribuzione SIIQ S.p.A. - CEO & Executive Director [17] -------------------------------------------------------------------------------- Very well. I would like to thank you very much on behalf of my colleagues as well. Have a good summer and hopefully we will meet with a cooler weather in November with the Q3 results. Have a good day all of you. Goodbye. -------------------------------------------------------------------------------- Operator [18] -------------------------------------------------------------------------------- This is the Chorus Call operator. The conference call has come to an end. You may disconnect your phones. Thank you very much.