Aedas Homes, S.A. (AEDAS) Earnings Call Transcript & Summary

Hello. Good morning. I'm Begoña Alcalde from the Aedas Homes' Investor Relations Department. On behalf of the whole company, I'd like to thank you for attending this call on our full year results on the period running from April 2022 to March 2023. This presentation has been published on both the regulators and the Aedas Homes website. Today's session will be covered by David Martínez, CEO; María José Leal, CFO; and Tamara Maranon, Director of Capital Markets. Afterwards, we will move to Q&A. [Operator Instructions] Before we get started, let me remind you that this event is being recorded and later on will be made available for playback on our corporate website. I'd also invite you to review the document's legal disclaimer. And now I will hand things over to our CEO, David Martínez. David, the floor is yours.

Thanks, Begoña. Thank you for joining us today for our full year 2023 results. I will start off by saying that the company has delivered a very solid set of results this fiscal year, thanks to outstanding execution in the delivery of over 3,500 units. But before we get into the details, I would like to take a few minutes to focus on the context and how Aedas is positioned to respond. Despite the volatility of the current context, the growth outlook for Spain remains positive and well above European peers. The unemployment rate is expected to remain stable with nearly 2 million jobs added since the pandemic [indiscernible] in 2020. Spanish households remain financially resilient with outstanding mortgage balance decreasing, while at the same time, the banking sector is offering attractive rates. And the Spanish households are continuing to enjoy strong savings. We see very solid long-term fundamentals for the new-built housing market. The sector is completing less than 90,000 units a year while over the next 15 years, the number of households created annually is expected to be double that figure, meaning that demand will outstrip supply for years to come. Aedas is uniquely positioned to respond to these long-term demand fundamentals. Our diversified very liquid land bank, which is 90% ready to build, we'll cover our goal for almost 5 years. And our growth target discerning customer base in the mid- to high-segment continues to enjoy strong purchasing power. We are also uniquely positioned financially with a diversified financial structure and solid liquidity that we can lever to develop our business. Aedas enjoys access to development financing in optimal conditions, thanks to consolidated relationships with Spanish main banks and access to capital markets through our long-term fixed rate, EUR 325 million green bond and commercial paper program with EUR 150 million maximum outstanding balance. We also have been able to tap alternative financing to fund our build-to-rent developments. And as of today, we enjoy a very robust cash position with EUR 199 million in unrestricted cash and EUR 46 million in restricted cash linked to customer down payments, as well as EUR 55 million in available liquidity lines. All these strengths and by staying true to our strategy, have allowed us to consolidate our leading position in the sector and deliver a very solid set of results this year. We've delivered over 3,500 homes, generating EUR 920 million in revenue, with a 17.9% adjusted EBITDA margin. Our land bank with over 15,200 units will cover delivery goals for the next 5 years. We ended the year with EUR 297 million in net financial debt, which is 1.9x EBITDA. In terms of shareholder remuneration, we will be distributing a total dividend of EUR 2.50 per share plus the amortization of 6.6% of own shares, both pending approval at the Annual General Meeting in July. And finally, we are making very solid progress on our contribution to a low carbon future, with 59% of our completed developments this year, achieving AA energy performance. Our main focus, as always, is on build-to-sell, our core business, with build-to-rent as an add-on that will provide flow over time as opportunistic initiatives. We will continue to take an opportunistic approach this way to build-to-rent, using it to derisk our business plan but without sacrificing value. This past year, our asset-light real estate services line which we launched 18 months ago, has proved its operating capacity with over 800 units delivered. We plan to continue scaling up this line as we believe it will be a key lever for improving return on equity going forward. Now I'll hand things over to María José and Tamara, who will take you through the operating and financial results. María José?

Thank you. First of all, I would like to remark that we have a very strong visibility on our goals for the coming 2 years, driven by very high sales coverage with 75% of 2023 and 32% of 2024 deliveries guaranteed as of the end of March, and over 3,700 units in our order book, valued at EUR 1.23 billion. We had a record year in terms of the number of homes delivered. Our co-development activity with BTS and BTR lines delivered 2,730 units at an ASP of EUR 324,000, only build-to-sell at an ASP of EUR 364,000. Our asset-light real estate services line, which was acquired in 2021, is now fully operational and delivered 814 units. We held 900 completed units on balance and expect to deliver them over the coming months as we obtain their first occupancy permit. In terms of our industrial capacity, we are reporting today that we have over 8,600 units in the market, of which 5,700 are already under construction and an additional 600 units with building permits granted, pending construction start in the near future. Last, over the reporting period, we formalized new investments for over 1,400 units for EUR 140 million and have purchase options on nearly 500 units worth EUR 58 million. As we have commented in previous presentations, we have increased our focus on our investment activity on the very resilient segment of the market, with ASPs for new investments averaging around EUR 435,000 per unit. Finally, as part of our asset rotation strategy, we divested plots for a total of EUR 30 million. I will now go over some of these points in more detail. Regarding our sales activity over the fiscal year, I will cover up first our retail customers. As we have been reiterating our position in the most resilient demand segment, has been key in allowing us to sell more than 2,100 units over the fiscal year, worth more than EUR 800 million. Considering our prior coverage ratios, we have focused on optimizing our pricing strategy and preserving our net margin. I would like to remark that our ASP on our build-to-sell product sold over the period, comes to EUR 385,000. Our order book in this segment stands at EUR 1.1 billion. One underlying fact is that despite the increase in our order book, our total number of resolutions has been almost the same number as in fiscal year 2021, thus, another proof of the resilience of our customer base. In our build-to-rent segment, we have seen several institutional players analyzing the market, as the imbalance between institutional supply and demand is still a key driver of the potential growth of the Spanish rental market. However, the interest rate evolution over the period and the fact that the new housing law has been finalized in the very end of the year, have been 2 elements that have pushed most decisions or standby for now. Therefore, we have delivered the projects slated for this fiscal year and have sold [indiscernible] expected to be delivered in fiscal year 2024. Our order book at the end of the period stood at EUR 100 million, of which most projects are expected to be delivered in 2023. Now let me cover build-to-sell demand a bit more by looking at absorption rates. First of all, this rate is the result of dividing total net sales of the period, again net of resolutions by total product on the market. We present absorption rates as moving average over each quarter to analyze demand trends as this is how we view this data internally. A 3.5% absorption rate implies that we are selling, on average, our projects in just 28 months. which is roughly the period it takes from the project launch to delivery. Post-pandemic, we saw very strong absorption rates given the level of pent-up demand generated over that period. However, this rate has normalized around 4% this year, which again is a very solid average. Considering our average ratios, we would be comfortable meeting our targets with lower rates. Thus, this should not be a factor to cause concern at these levels. Let's now see how we have performed on the operations side. Over the reporting period, we have increased our activity significantly. We have put almost 3,400 units on the market. We have decided to sell 140 units on 2 projects planned as build-to-rent. Thus, the net figure reported is impacted by this fact. I will touch briefly on build-to-rent activity by reminding you that we decided in 2019 to develop this commercial activity, given our concentration of land plots in some sectors. Over these 4 years, we have significantly decreased this concentration. Thus, we have been less active in launching new turnkey projects devoted to institutional investors. This fact, combined with the general interest rate and regulatory environment I described before, have impacted our KPIs. On the construction front, other construction costs have stabilized, we have managed to break ground on almost 3,400 units and have seen the most significant increase in build-to-sell projects, with activity up by 24%. Last, a key number to understand our industrial capacity over the coming 24 months is the level of units under construction plus the number of units completed, which stands now at 6,600 units. This is a very important figure in terms of forecasting our potential deliveries for the coming 2 years. We have also received building permits for projects for over 600 units, meaning that we can break ground on these developments in the coming months. Let's now move on to coverage ratios. First, on the left, we have launches. As you can see, at the end of March, we have over 90% of the units that we will be delivering in 2024 on the market. Moving on to sales, graph in the middle, you can see that we started our new fiscal year with 75% of 2023 and 32% of 2024 sold, giving us very good visibility further out. And on the far right, construction, at the end of March, we had 900 units completed, ready for delivery over the coming months. Some of them still need to receive first occupancy permit and are progressing well on completion of our 2023 deliveries. Looking at fiscal year 2024, which was a concern to some of you, I'd like to point out that at the end of March, construction was ongoing on close to 90% of our target deliveries. And over this quarter, we have been working on breaking ground on the 600 units, which held building permits, putting us in good shape in terms of construction coverage. These current execution levels have put us in a strong position to achieve our business plan targets. And as of today, I can confirm visibility on over EUR 1 billion in revenue, in both fiscal year 2023 and 2024. I will now move on to investment. Regarding our investment focus over fiscal year 2022 and considering our land bank on balance at the start of the period, we have taken a very selective approach, keeping our rigor on profitability and use of capital. As a result of this, we have invested EUR 140 million to acquire 1,428 units, which were not committed in prior years. Our focus on optimizing our use of capital to improve our ROE is seen as we have executed transactions committed in fiscal year 2021, worth EUR 64 million more, and have settled payment deferrals from last year, amounting to EUR 30 million. We followed the same path in fiscal year 2022 and closed the year with land purchase options worth EUR 58 million and payment deferrals of EUR 38 million. Considering that more than 75% of our land bank is already active, we will see further improvement of our ROE over the coming years. Regarding our investment profitability hurdles, this remains as a minimum net developer margin of 20% at the point of investment. We have kept our focus on higher ASP products, given the resilience shown by this demand segment and have come to EUR 435,000 on new investments identified over the period. Last, as part of our asset rotation strategy with the same focus of improving our ROE, we'll have sold land for a total of EUR 30 million amount in different sectors. Except for 5 plots, the selling price has been in line with the gross asset value reported in March 2022. Thus, the quality of our underlying asset base still remains. I will now touch briefly on our progress on our path to reducing our emissions by 50% by 2030. All fiscal year 2022 completed developments achieved [indiscernible] and we are continuing to carry out a life cycle analysis on all our completed developments. Of the developments we activated in fiscal year 2022 for delivery in future years, 62% are targeting at AA energy rating and 59% of the developments we completed this year achieved this AA energy ratings. As you know, by fiscal year 2023, 25% of the units we deliver will be built fully or partially off-site. The incorporation of modern methods of construction into our projects, allows us to build faster, better and more sustainably. Based on projects in our current pipeline, we expect that over 3,100 units will incorporate high-quality elements built off-site in the coming years. We've signed agreements with benchmark suppliers of low-impact materials, such as sustainable concrete and 100% recycled aluminum. And finally, we are now building with mass timber. Fioresta in Alicante, is our first multistorey mass timber project. Wood, as you know, is a very sustainable building material, delivering significant reductions in CO2 and as well in construction time frames. I will now hand it over to Tamara to go over the financial results. Tamara?

Thank you, María José. During 2022, we recorded EUR 920 million in revenue, 20% higher than the previous year due to higher levels of operating activity. In particular, this increase translates into EUR 154 million in additional total revenues, which is mainly driven by the growth in the number of deliveries, plus 463 units year-on-year, reaching total deliveries of 2,730 units at an ASP of EUR 324,000, 2% lower year-on-year, given a higher contribution of BTR to total deliveries. The remaining growth comes from the [indiscernible] and from our Real Estate Services division. In terms of gross margin, we recorded EUR 241 million, a 9% growth year-on-year and 26% margin, a level which remains in the guidance range provided in the IPO. This margin was driven mainly by a lower development gross margin, 26.7% in 2022 versus 28% in 2021, coming not only from product mix and a heavier weight of BTR units delivered with lower gross margin, but also from incentives paid to construction companies for early delivery and milestone achievement, additional costs related to improving quality and completed products, raw material cost review in certain contracts and one-off claims. All in all, if these 4 items had not occurred or even if they had occurred but the impact had been less, the gross margin would have improved up to a maximum of 27.6%. In terms of EBITDA, we generated EUR 164 million, a 10% growth year-on-year, including the EUR 9 million adjustment to fair market value of plots acquired [indiscernible] from affiliate companies dedicated to the management of a strategic plan. Thus, this is not the current value at fair market value on our balance sheet, the value which is higher than the price paid for them. The adjusted EBITDA margin stood at 18%, which is lower compared to last year. This was due not only to lower gross margin, as I previously mentioned, but also to the following additional costs: higher marketing expenses given the 10% increase in the number of BTS units put on the market, higher local taxes due to higher volume of deliveries and increase in the LTIP due to the approval of the second plan, and a slight increase in overheads coming from the digital strategic plan and the limited growth in personnel expenses. Subtracting D&A, net financial result, corporate taxes and minorities, all of which remain stable, net profit came to EUR 105 million, resulting in an EPS of EUR 2.42 per share, plus 14% compared to last year and a return on equity of 10.8%. Now let's go more in depth in the performance of BTS, BTR and our Real Estate Services division. Starting with our core business line, we can observe that while total BTS deliveries over the period were lower than in 2021, total revenues increased by 6%, up to EUR 773 million, which accounts for 87% of total development revenues. This increase is supported by our continuous focus on the most resilient segment, which allow us to benefit from our ability to capture additional growth through higher ASP, plus 8% in 2022 compared to 2021. This target customer strategy is also reflected in the sustained gross development margin of our BTS product. We recorded a healthy 28% gross development margin. However, if the extra cost previously mentioned had not occurred or even if they had occurred but their impact had been more limited, then the gross development margin would have stood at a level similar to last year. Moving on to the order book and the units we have on the market, we see a solid order book, having recorded only 37 resolutions of private sales agreements. The current order book, which is comprised of more than 3,100 units at an ASP of over EUR 360,000, is expected to generate future revenues of EUR 1.1 billion, with our Madrid and [indiscernible] regions being the largest contributors, both in terms of units and revenues. And looking at more than 7,500 units that we have on the market, we see further expected upside in ASP from the unsold units. If we exclude the units we've already sold, we have more than 4,400 units pending sale at an ASP of EUR 427,000 plus 11% compared to the EUR 385,000 ASP of the units sold in 2022. Now let's move on to BTR performance. From the beginning, we do add the BTR strategy as complementary and opportunistic product in order to accelerate the asset rotation in those sectors with a strong concentration in land. This asset rotation strategy has been very successful. And as of today, concentration is not so strong. So we do not anticipate a material number of new BTR launches going forward as we feel comfortable with the circa 700 units that are already active, some of them in the design phase, but still unsold. Our current BTR order book is comprised of 567 units at an ASP of EUR 176,000, after a period of interest and record delivery activity in 2022 when we delivered 610 units at an ASP of EUR 184,000, generating EUR 112 million revenues and gross development margin of 19%. And while this gross margin on BTR deliveries is lower in comparison to last year, it is in line with gross margin on BTR products, which is generally under 20%. The acquisition of Áurea in 2021, opened a new but complementary business line aimed at improving our return on equity, diversifying our capital sources and developing new living formats. The Real Estate Service division is dedicated to helping institutional investors and family offices to execute investments across the entire spectrum of the Spanish living development sector on the back of our unparalleled industrial capacity. As part of this strategy, we delivered 814 units in 2022, all of which were located in Madrid and the north of Spain, 52% through the co-investment structure and 48% through the end-to-end project management structure. We generated EUR 5 million in revenues from the fees charged [indiscernible] EUR 3 million in gross margin, resulting in a 59% margin, EUR 1 million in dividends and net positive impact of circa 30 basis points in the return on equity. Currently, we are managing the development of circa 3,600 units in Madrid under the [indiscernible] scheme on behalf of a Tier 1 institutional investor. These units are expected to be delivered between fiscal year '24 and fiscal year '25, and we expect to get EUR 5 million in revenues between '23 and '25, after having recorded EUR 1.8 million in 2022. Additionally, we are currently working on new agreements under different structures for different types of living projects targeting double-digit returns. Now I hand you back to María José to go through the balance sheet and leverage profile of Aedas.

Our balance sheet is a clear reduction of our strength and strategy. First of all, inventories stood at EUR 1.6 billion, and growth came from progress on development of our projects as the total balance of land plots decreased over this period. These are very liquid assets. Our solidness, reflected by our cash and equivalent position at the end of the period came up to EUR 245 million, of which almost EUR 200 million are available. Our debt structure, established in 2021, most of which is long-term and 65% fixed rate, reinforces the solidness of our balance sheet. I will, nevertheless, touch on leverage with more detail on the following slides. Last, regarding changes to equity, given dividend distributions and share buybacks, our equity levels have remained stable as anticipated. Regarding our debt profile, I would like to remark, first of all, the diversity of sources that we have been accessing over these years with the combination of freight financing debt provided by retail banks and private financial investors, working capital lines from public markets and relationship banks and long-term corporate financing also from relationship banks and capital markets. This variety allows us to optimize our capital structure at efficient cost and maturities. The balance at closing implied that 65% of our gross debt was fixed for the coming 4 years and at a 4% rate. And we have been using tactically working capital lines with an average cost of 4.3%. Regarding construction financing, we have seen a significant increase of its cost in line with the evolution of the ACV-based interest rate, but we are now working on optimizing these costs as well. In any case, the weight of financing costs on our gross margin over this year has implied a dilution of less than 0.2% of gross margin. Keeping this structure in mind, our nominal cost of funding at the end of the fiscal year has come up to 4.5%. The profile for maturities is shown as well on this slide, with the heaviest maturity is still 3.5 years from now and an average life of over 6 years. Last, our total liquidity, including undrawn developer loans, which can be used to meet our construction payments, comes up to over EUR 670 million, and excluding construction financing, EUR 370 million, which enables us to cover our short-term commitments comfortably and therefore, optimizing our funding structure. Now let's look at cash generation capacity, which also indicates the strength of our business model. Our operating cash conversion ratio of our revenues has come up to 13% over the fiscal year. The first point worth mentioning is that interest and corporate income tax payments over the year have come up to EUR 47 million and exceeded the prior year payments by EUR 19 million, mainly due to the fact that in fiscal year 2021, only one semiannual bond coupon was paid and over 2022, we have paid 2. And the reference interest rate has been 389 basis points higher over the year, and that our total drawdown amounts over the second half of the year have been higher than those of 2021. Our working capital needs, which are shown considering the assignment of developer loans to our customers on the delivery moment as they had paid up those amounts, and we had canceled the outstanding debt, came up to EUR 39.2 million. This figure is including EUR 121 million of net cash outflow on investments and divestments. Taking all this into consideration, our free cash flow generation came up to EUR 74 million. Now let's look into these facts, into how these facts are reflected in our leverage metrics and the impact on grade rating. We are showing the evolution of our credit metrics over the last 3 years. As once the company has reached a strong level of deliveries, we have seen these ratios stabilizing at very contained levels, proving our strong financial discipline. Our net debt-to-EBITDA has been kept below 2x and net LTV well below 14.2% this year. There has been certain deterioration of interest expense coverage, which has come down to 6.9x as a result of the increase of the reference rate. Our free cash flow generation has covered a strong percentage of our shareholder remuneration, was still growing the business. Inventories have increased by EUR 91 million. And as you can see, this has implied a net debt position by the end of the fiscal year of EUR 297 million. These facts have been reflected in our strong credit rating from S&P, Fitch and Moody's, where Aedas is placed as the best rating outcome. This financial spread is one of the levers of our industrial capacity, and we will keep on working to maintain them. I would like to briefly touch on the outcome on our annual third-party appraisal as a proof of the quality of our underlying assets, which is not being reflected on the evolution of our stock price. We run this exercise yearly to ensure that we did not have our inventories overvalued on our accounts and to provide our lenders with a view of the value of the underlying assets. Our gross development value has come up to EUR 5.8 billion, which on a unitary basis comes to EUR 394,000, thus, reflecting an increase of 13.7% versus the end of the previous fiscal year. Our GAAP stood at EUR 2.088 million, including unrealized capital gains of EUR 492 million. Our net asset value came to EUR 1,456 million, considering that we have devoted over EUR 342 million to shareholder remuneration over the last 4 years, if we add this figure, our net asset value would have stood at almost EUR 1.8 billion. Last, our NAV per share came to EUR 33.48 per share, which has shown stability since the company was listed, even though there has been plenty of operational and financial challenges over these years. I will now hand it over to David for his final remarks.

Yes. Thanks. At the upcoming Annual General Meeting in July, the Aedas Homes' Board of Directors will be proposing a total dividend distribution of EUR 94 million, equivalent to EUR 2.15 per share to be paid out of fiscal year 2022 net profit. As you know, the company already paid an interim dividend of EUR 1 per share back in March. So we plan to complement it with an additional EUR 1.15 per share at the end of July, pending AGM approval. This works out to payout ratio of nearly 90%. And finally, let me point out that in addition to this very attractive dividend, the Board of Directors will propose to the Annual General Meeting, the amortization of own shares equivalent to 6.6% of share capital. Now to wrap things up, I'd like to share a few key messages with you. Despite the current gross wins, our build-to-sell operating activities continue to evolve very positively. And our current book is giving us a very clear visibility on our fiscal year 2023 and 2024 goals. While we do expect sales to be affected by interest rate hikes, our target customer in the mid- to high-segment should continue to demonstrate resiliency. We continue to exercise rigor in our investment strategy, ensuring that each and every investment decision we make, optimizes the use of capital. Today, we are aiming to have a land bank that covers around 5 years of deliveries. Our focus continues to be on improving return on equity for our shareholders. And we are doing this by improving efficiency across our operations by further standardizing our product and implementing modern methods of construction more broadly by sticking to our buy-to-launch strategy, as keeping assets on our balance sheet for a shorter period of time and by growing our Asset-Light Services division, which allows to scale up production while leveraging on third-party equity. Today, we've shown you what sets Aedas apart and has made this where this company is so successful at delivering value. We've delivered a standout performance this year, now 5 years in a row. I firmly believe that we have built a very special platform that is poised to take full advantage of the long-term demand fundamentals in the Spanish residential market. We have the track record to prove it. And I think it's clear that this company has the potential to go even further. Having said that, I think María José, Tamara and I can now take a few of your questions. I'd like to ask that you ask questions one by one, please, so that we'll be sure to answer all of them fully.

[Operator Instructions] Our first question comes from the line of Ignacio Domínguez from JB Capital.

Firstly, could you provide more granularity on fiscal year '23 and fiscal year '24 guidance in terms of deliveries? With respect to today's piece of news regarding a slowdown in housing demand, do you expect it to be evenly split between foreign and domestic demand? What kind of trend in foreign demand do you see in the past months?

We have a strong visibility now on over EUR 1 billion in annual revenues for the next 2 years. Regarding margins, we are expecting a small compression due to the impact of construction cost inflation over the last 2 years. So we will be around 26% in terms of gross margin. Regarding sales, we have observed a decline in sales in the last couple of months compared to the peaks in 2021 and the first month in 2022. And the reason for this is largely due to the uncertainties surrounding hikes in interest rates. Customers postponed decisions when they don't know with certainty what they will end up paying. Meanwhile, what we are seeing is an increase in sales in the cost locations, basically for foreign demand. We have observed a significant increase in the last months from the foreign demand. In fact, in our last month, the amount or the sales to foreigners amount 30% of our total sales.

I think you had one more question on demand. Could you please repeat it, please? Okay. Then operator, we can move to the next question.

Our next question comes from the line of Ignacio Romero from Sabadell.

I would like to ask about the guidance for net for this current year, please, in terms of EBITDA and also in terms of sales.

Thank you, Ignacio. I mean we've given already the guidance that we will be generating revenues above EUR 1 billion and a small compression on margins versus this year, that's all the guidance we will be providing. In terms of sales, David has already covered as well that we have seen or we are expecting certain slowdown in demand from the peak we saw over 2021 and 2022. This slowdown was already perceived last year over the second and third quarter in any case.

The next question comes from the line of [indiscernible].

So one by one. On demand, just a follow-up. Sorry, on margins, just a clarification. So you've mentioned 26%, that's BTS margin, that's blended margin between BTS and BTR?

Blended.

Blended. Blended. Okay. So very small compression. Okay. Okay. Then another question is with regards to your ambition of reducing the land bank in Q2, 4 to 5 years. So based on your actual land bank, which is slightly above 15,000 and your future deliveries. What [indiscernible] land investment should we expect in the next one to 2 years?

Yes, you're right that our focus is to keep it between 4x to 5x land bank coverage, which is where we stand at the moment. Therefore, you can expect us investing a similar amount to what we have done on the current fiscal year.

Our next question comes from the line of Ignacio Domínguez from JB Capital.

Yes. This time, my question is on cancellation rates. Have you seen a rise in cancellation rates during the last couple of months?

No. The cancellation rates keep stable, similar to last year levels.

Our next question comes from the line of [indiscernible].

I've got 2. I'll make them one by one. First of all, sorry, because I joined a bit late in the conference call, so sorry if you have already answered any of them. So first one is regarding the amortization of own shares. Since you're amortizing almost all your treasury stock, is it a possibility for you to enter a new share buyback or is this completely out of the question?

Yes, there is -- I mean, as you mentioned, we are amortizing most of the stock on balance at the end of March, but we have a share buyback program that started on 27 September 2022. The total target amount was up to EUR 50 million, and we have utilized more or less EUR 4 million out of that. So the company can still buy back stock.

Okay. And the second one is regarding the dividend. Despite seeing this quite attractive payout, we have seen other companies, other peers adopting more aggressive strategies as regards to dividend. I understand that your policy is to be a bit more conservative in this sense. However, if you were to be more aggressive in the future, does your [indiscernible] prevent you from paying dividend? Would this be an issue or could you [indiscernible] if needed at any time? Just to understand where is the limit as regards to dividend payout.

Well, we think this is a very prudent and attractive remuneration policy. We are distributing 90% of the net income of the company while we can keep producing the same amount of units. We are not limiting the growth of the company. So we think it's a prudent but attractive remuneration policy. We're not planning to change it.

There are no further questions from the phone at this time. I will now hand back to the management team.

We can now open up the Q&A session to questions coming from the webcast platform. The first group of questions comes from [indiscernible]. Why are the quarterly order sales declining? Are this due to declining demand from affordability challenges?

I will cover the questions, if you don't mind. I have to say that, as we've mentioned, we saw a peak of demand in 2021 and early 2022. And this level of pent-up demand that we saw post-pandemic, allowed us to show very strong coverage ratios that were a bit too high as well as absorption rates, and we've been saying this over the last 2 years. Our current absorption rates allow us to sell a project at the same pace as it is developed, which is ideal to fully capture additional pricing and to make sure that we are not overselling through the life of a project. In terms of demand and affordability ratios, at the close of natural year 2022, this ratio on Spain stood at an average of 38%, and our average is around at least 8 points below this. So that means below 30% affordability. We believe that the current demand trends relate more to a normalization of the market and as well to some uncertainty regarding interest rates.

And the next one, what is the level of target deliveries and time line to achieve this target?

In terms of target deliveries, we are providing a guidance of above EUR 1 billion yearly and the time line is something that we will be achieving from this 2023.

And last one. Can you please give an idea of what percentage of people who buy Aedas Homes as their primary residence use mortgages? And also regarding mortgages, do you know how long mortgages are typically fixed for, 2 or 5 years?

It's out of our first-time buyers, which is -- sorry, buyers who use this as their primary residence, which last year was around 70% of the total base. We saw that around 80% of them do take a mortgage. In terms of interest rate levels, we have seen over the last quarter because this is something that changed quite a lot through 2022, but it has stabilized over 2023. We are seeing interest rates offered to our customers at around 3.5% fixed for at least 5 to 10 years, and after that they become floating loans with a spread of around 0.5% over one year [indiscernible].

The next question comes from [indiscernible]. Could you give us some color on the latest negotiations that are taking place on the build-to-rent segment? What is the appetite of [indiscernible]?

So we do still see appetite from institutional investors, but there is still uncertainty in the sector, not only because the increase in the interest rates, but also due to the new housing loan approved last week here in Spain, so we see that they want to close new agreements, but the point is when they find the right moment to do it.

The next one also from [indiscernible]. Could you provide a bit of color on the levels of commercialization seen in the last quarter? Based on absorption rate, it appears that things have slightly improved. Could you highlight if there has been any difference among the different regions across Spain? What about the demand coming from foreigners? Can we expect a [indiscernible] coming from foreign buyers than initially anticipated?

Yes, regarding demand trends over the last quarter of the fiscal year and as well the first 2 months of this year, I have to say that the last quarter was slightly stronger than the rest of the year. And we saw a strong demand coming from foreigners. But over the first 2 months of the year, we have seen demand and absorption rates getting closer to this 4% or so but at a much higher average selling price, which is also worth noting. In terms of correction from foreign buyers, we haven't seen that over 2022. I mean that's as much as I can say there.

The next question comes from Ami Galla at Citi. Can you outline the scope of the asset-light business over the next 3 years and targeted returns for this segment?

As already mentioned in the presentation, we are currently managing circa 3,600 units under the [indiscernible] and apart from that, we are currently exploring new opportunities to be pursued with institutional investors as well as with family offices within the leading 4-month. And the kind of project that we would like to do or to carry out are those strategies targeting net IRRs between mid-teens and high teens of returns.

This is the end of today's presentation. In case you have any follow-up questions, the Investor Relations team will be delighted to take them. Thank you very much for your time. And I remind you that the next earnings release corresponding to our Q1 2023/'24 results will be reported on July 21, 2023. Thanks for joining us, and have a good day.