Colonial SFL, Socimi S. A. (COL) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the Inmobiliaria Colonial 2019 Full Year Results Presentation. The management will run you through the presentation, which will be followed by a Q&A session. [Operator Instructions] I am now pleased to introduce Mr. Pere Viñolas, CEO of Inmobiliaria Colonial. Sir, please go ahead.

Thank you. Good afternoon, good evening, everyone. I'm Pere Viñolas. I'm the CEO of Colonial. As usual, I have here with me Carmina Ganyet, Corporate Managing Director; and Carlos Krohmer, Chief Corporate Development Officer. We are going to start the presentation as in previous presentations. So I'm going to start with the highlights, and then we'll go through the different operational and financial section. I am in Page 6 of the presentation, just to summarize our highlights and the main results that we'd like to share with you today. First of all, I have to say that we are pretty satisfied to share with you, again, an excellent set of results. We are announcing results that represent an EPRA NAV of EUR 11.5 per share. That is 14% up on previous year, together with the dividend already distributed, that means a total shareholder return for 2019 of 16%. Our gross asset value will now be at a level of EUR 12.2 billion, which means a 9% growth like-for-like. Our gross rental income is now EUR 352 million for 2019 with a 4% like-for-like. The recurring earnings are EUR 139 million, which is 38% more than in the year 2018. If we talk about EPS, recurring EPS for closing figures of 2019 is EUR 0.274 per share, which is 23% more than the previous year. And the group net profit is EUR 827 million, which is 58% more than the previous year. These outstanding financial results are based on a very strong operational performance. We've gone through many significant milestones in this year. I would like to mention a significant one, the disposals that we've done close to EUR 500 million, EUR 477 million, all of them done at a premium on GAV with an average of 16% premium. Also the ordinary activity of the company has been very strong. The numbers that we're seeing, the outstanding financial results, are based on a very hot environment of a very strong activity. We've signed more than 250,000 square meters that have been let with top tier clients during last year. Vacancy remains extremely low, 2.7%. And rental prices, as we will see more in detail, remain with a strong growth trend, both if we measure in terms of release spreads, which remain at double digit or if we talk about rental growth compared to the previous ERV. We've also gone through an acquisition program that it's already at the level of EUR 160 million. And we remain very comfortable and satisfied with our pipeline of EUR 1.3 billion, with an expected 6.6% yield on cost. On Page 7, is a little bit of the same numbers. So I won't go through this in detail, but basically maybe in this page, you can see 2 additional layers of information. Talking about the like-for-like growth on GAV, which I mentioned that these are 9%, all markets are performing equally strong. The like-for-like for Madrid is 6%, the like-for-like for Barcelona is 16%, the like-for-like for Paris is 9%. Our -- in terms of balance sheet, we already mentioned our NAV growth, which is 14% for 2019. And talking about the capital structure, remains very solid. The LTV now has come down to 36% with also an existing liquidity for the company of more than EUR 2 billion and the rating of Standard & Poor's remaining at BBB+. In the Page 8, talking about the solid fundamentals. I already mentioned the very low EPRA vacancy of 2.7% and very strong volume of square meters signed. I would like to emphasize, as you see in the pie chart, that everything we do means always that we remain very much committed to our strategic positioning in prime CBD. At the end of 2019, with everything done, 76% is -- of our portfolio is in CBD, I would add real CBD. 92% of our buildings have energy certification. And talking about rental growth. I mentioned that the group like-for-like has shown a 4% rental growth like-for-like. You can see that this can be broken down into Madrid 6%, Barcelona 2%, Paris 3%. If instead of talking about the GRI like-for-like, we talk about release spreads, our release spread is double digit. It's 14%. Barcelona 31%, Madrid 9%, Paris 7%. If we talk about strong rental growth, comparing the rental prices that we signed with the ERV existing at December '18, the rental growth is 6%, which can be detailed, Barcelona 9%, Madrid 4%, Paris 7%. So this would be the introductory remark and main highlight, as you can see, are showing very positive results. As usual, now we will enter into a section of comments on where the market is today, where we do see the market. Later on, we will come back to Colonial to talk about our operational performance and financial performance. So I give the floor to Carlos Krohmer to talk about market conditions.

Okay. Let's step to Page #10. Here, you can see the rental markets. As you can see, the 3 cities with very strong fundamentals. Barcelona 1.7% vacancy in the CBD. This is an absolutely historical low, facing a record high in take-up in demand 410,000 square meters, this is a historical high take-up, 12% year-on-year growth. This, at the end, puts a high pressure on the rents that have grown 9% this year. And the perspective is that will go on growing quite strong. On Madrid, similar story. CBD vacancy is 6.5%, 600,000 square meters of demand, above the 5-year average, prime rents growing and robust perspective regarding the future. In Paris, the CBD is an all-time low also, 1%. And the take-up is above the 10-year average. And here highlighting that more than half of the take-up is really in the City Center. We are at rent of EUR 860. And recently, we have seen both in the market and also in our portfolio some examples of rent above EUR 900. In the investment market, we see a similar strong situation. Barcelona has had a year of huge investment volumes, 4.5x the volume of the year before, and the yields are 3.5%, that means a 300 basis point spread. There's a big interest for assets in the 22@. Madrid also more than EUR 2.4 billion of volume, and especially, there have been recent transactions in the CBD at very high prices and a spread of close to 280 basis points. And Paris, we've just drawn historical record in volume, EUR 12 billion of office volume, 10% year-on-year growth and 70% are really big deals above EUR 100 million. The spread is attractive 260 basis points on the reference rate. On the next page, you see quite recent transactions, big transactions, you can see the capital values or the euro per square meter values on every market, that the market is really strong and the people are looking at defensive assets when they look at investments. Stepping now to the operational performance on Page #14, you can see the data points that Pere already mentioned. There has been a huge volume of contracts made, 263,000 square meters and in very good terms on every single measure, as you can see here on Page 14. When we go into the detail, we see on the left-hand side on Page 15, the release spread, split by the, temporary on the year, first half and second half. We see quite a significant acceleration in Madrid in the second half on the release spread. And when we look at the ERVs, also quite strong. Important thing to say here, on Madrid, we have done, especially in the second half, a lot of letting up of Axiare -- former Axiare assets, that part of them are outside M30. So here we saw it interesting to do also the split of all the contracts that have been signed in the City Center that has a better performance than the ones that are outside. On Page 16, another very important element in the contract portfolio is the renovations programs, where we accelerate and advance tenant rotations in cases where we see significant upside. Haussmann is one of the cases we started a year ago. It now has been fully delivered with a rent above EUR 800 per square meter/year, 10% versus the ERV, fully let with a long-term contract. And Paris Neuilly and 22@ Barcelona, these 2 assets are not fully finished, but they are really good on track. They have good performance in what we have seen so far. Page 17 and 18 is just to show examples that state and then show you that all of this rental growth is really across the board on every single asset in every single contract. Page 19 is a very important and interesting one. You will remember 1 year ago, we had on the Madrid portfolio a vacancy ratio of 10.5%. This has come down 600 basis points in 12 months. We are now at 4%. And if we look at the impact of the total group, vacancy was 4.4% at last year's December, today is 2.7%. Moreover, we are continuing with very strong momentum, especially in Madrid, we are progressing at the first weeks of the year. On Page 20, you have the full view on the portfolio. Here, you see additionally, Barcelona and Paris. They are at very healthy levels, both around or below 2%, giving a good tension for rental pressure. We have delivered this year assets, assets on the pipeline and also projects that we inherited this both outside the City Center, we have delivered quite strong products. This means that the implicit -- the real -- delivered crystallized capital value growth on these 4 assets is aggregating 41%. If we only look at the CBD ones, it's close to 50%. ESG, it's important for Colonial. This is a year of very strong momentum, basically on 5 points. We had such a significant improvement on GRESB. We have a very strong increase on the scope of assets that have BREEAM and LEED certificates, EUR 1 billion more in value and quite outstanding compared to the European peers. We confirm and maintain AA rating on MSCI that 2 years ago was a BBB. We have been in Spain, the first mover on ESG loans, and we have been included in the Ethibel Sustainability Index from Vigeo that includes best-performing companies on a quoted index. Here on Page 23, basically, you see that we are at very high levels on the relevant ratings.

Okay. So on the financial performance, in this section, we are going to cover the main impact of this outperformance indicators in our P&L. So the first one is the gross rental income with an outstanding 4% like-for-like. Madrid with the highest 6% like-for-like and Paris and Barcelona remaining with a strong 3% and 2.4% growth like-for-like. The strong fundamentals and the strong performance of our portfolio has been able to offset the negative impact due to the disposal. Be aware that in 2018, we were selling EUR 450 million rebound deal. And in 2019, roughly EUR 418 million, which partially has been already executed in '19 and the rest will be executed in 2020. So the positive performance has been able to slightly offset above the negative impact of our disposal. If we see -- analyze the sources of this 4% rental growth in the next page, 26, Madrid with 6% like-for-like, important rental prices increased in combination with solid letting up activity. 2.4% due to the volume and 3.7% due to rental growth in prices. And Barcelona and Paris, mainly driven -- this strong rental growth mainly driven by prices. Another important impact in the P&L is the revaluation of our gross asset value, Page 27. So after the price evaluation, December '19, the gross asset value is growing 9% like-for-like with this slightly positive -- a negative, sorry, impact of net disposals in 2019 of 2%. Important impact in Barcelona due to the project, which have been delivered in '19. As you can see in Page 28, the split of this gross asset value growth between project delivery, price and yield. Notice that 2/3 of this gross asset value growth comes from strong Alpha component, project delivery and rental growth. And additionally, 1/3 is due to the yield -- additional yield compression as a consequence of the scarcity product that half the markets where our portfolios are operating. So a strong gross asset value growth up to EUR 12 billion in December 2019. Part of this value creation, as you know, comes from the disposal program. We have been able to sell nonstrategic assets. Between '18 and '19, we have sold noncore assets coming from Axiare, another asset, which is our -- part of land bank in Parc Central in Barcelona, which has a significant premium of 16% on the previous GAV. So part of this disposal has been already executed in '19 and EUR 200 million will be executed, especially in the logistic portfolio in 2020. This rotation -- this recycling capital activity leads Colonial to flight to quality and being more focused in the prime office. Today, 94% of our portfolio are offices and which have significant exposure, more than 70% in the prime CBD. So consequently, our P&L, is where you see in Page 30, the group net results increased 58% from EUR 525 million in 2018 to more than EUR 820 million in 2019 with a significant growth of 58% of the current results and also with a significant growth of more than 20%, 23%, on the recurring EPS from EUR 0.22 to EUR 0.27. As you can see in the building blocks, significant impact on the EBITDA predisposal, significant impact also on the financing cost. And of course, an important impact due to the increase of our interest in SFL, thanks to the Qatar Investment Authority contribution in December 2018. As you know, we are continuing being very committed in maintaining the strong profile in our credit profile or our investment -- sorry, in our credit profile. I'm on Page 31. We announced our commitment to maintain the solid capital structure in the range of 36%, 40% loan-to-value, and we have succeeded in decreasing the loan-to-value and improving this capital structure profile with 36% loan-to-value. Again, we have also been able to improve our spot cost of debt being reduced to 1.63%, maintaining a very strong position of liquidity to be able to maintain our investment policy activity of EUR 2 billion in liquidity lines and also being the first mover in ESG loans and, as Carlos explained, our ESG strategy helps to improve our cost of capital being able to negotiate the new investment -- the new ESG loans and potentially in the future, the new ESG bonds. So as a consequence, our rating is maintaining in a -- BBB plus, in a very stable outlook and a very, I would say, with a room of being improved subject future performance. So consequently, we maintained, again, a very solid total shareholder return level with 16% in '19 -- in 2019 in line with the previous year, 14% of the total shareholder return through capital growth, through NAV growth and 2% due to dividend paid in 2019. The source of this value growth, I am on Page 33, is mainly driven by Alpha strategy. So more than 50% of this NAV growth is due to the project delivery and renovation program and also the rental growth that we have been able to implement through our repositioning strategy in most of our portfolio and also being in a market with a very scarcity supply and a very strong demand. We have been able also to add additional value with additional yield compression of 4.6% out of this 16% total shareholder return. In the next page, you see in numbers what is the Alpha component of this energy growth, 0.7% -- EUR 0.7 per share is -- thanks to this project delivery and renovation program, Louvre in Paris, Haussmann fully let in Paris, plus Gala Placidia in Barcelona, Pedralbes Centre in Barcelona, Avenida de Bruselas in Madrid, everywhere we have been able to implement this office strategy and value-added strategy and adding EUR 0.7 per share to our NAV growth. And additionally, as you've seen before, the strong performance of our release spread. We have been also able to add EUR 0.39 per share through rental growth. Being able to beat the market this year, as you've seen before, we have been close contract 9% above the ERV included in our previous appraisal in 2018, 6% in Madrid City Center and 7% in Paris.

Thank you, Carmina. Maybe I would like to emphasize on this slide, this recent slide, to again share with you what's going on at Colonial. To summarize, as you can see, Colonial is delivering 15% total shareholder return -- 16% if we talk about total shareholder return, 14% if we talk about NAV. So this, roughly speaking, 15% growth that we are delivering, where it comes from? Well, certainly, it comes from yield compression that is happening everywhere across Europe, and that is giving us less than 1/3 of this growth. But then there's another 1/3 that comes from rental growth, which is, let's say, more unique, I would not say only about Spain, I would say about CBD. So where you have real CBD, you have full occupancy. Where you have full occupancy, you have real rental growth. So that's another 1/3. And the final 1/3, which, in fact, actually is a little bit more than this is our Alpha strategy. That is our consistent engagement in being involved in the renovation programs and delivering value through turning around our properties. So that's a simple idea, 15%, 1 part coming from dividend yield compression, but more importantly, another from rental growth and another from Alpha, that's where our story is coming from. Based on that, what do we think about the future growth drivers, on Page 36. Well, actually, what I'm sharing with you now is not breaking news because we are pretty much consistent in what we do. So it shouldn't be a surprise. But let me emphasize and summarize again why are we comfortable in the trend that the company is showing. First of all, our strategy is very much focused in offices, and within offices, in the prime world. And as I've shared with you before and I shared with you just now, there's a number of reasons, but the first one is prime CBD is the one that allows you to deliver real rental growth, basically because in the markets where we are, that's where full occupancy happens. And that has, as a direct consequence, real rental growth. On top of that, although we have been delivering very strong returns in not only this year, but in recent years, we always want to work on -- in the concept of risk-adjusted return. So it's not only for the short term, it's for the long term that we want to deliver something of high quality to our shareholders. We, again, being positioned in prime office, we believe that gives you the ability of giving not only a good return, but also a very good risk-adjusted return. In Page 37, there is our famous map about where our properties are, that we always believe that this speaks for itself. Maybe what I would like to add this time is a little bit of color on the kind of rents that we are signing in these markets. In Barcelona, we've signed EUR 29 per square meter. In Madrid, we've signed EUR 36 per square meter as our best contract. And in Paris, we've already crossed the EUR 900 per square meter benchmark -- milestone. So we are pretty satisfied with the kind of things you can see in the prime CBD. So that's our first value driver, our strategy on this prime CBD market. Our second value driver is a pipeline that you can see on Page 38. Basically, here, I would like to say the projects are already well known. All of them go on track. If I have to emphasize a couple of things, I would say we have been accelerating some of them, in particular, Castellana 163, the one with the number 1. It -- previously, we expected this for 2021, now we are envisaging 2020 for the delivery of this. The second thing I would like to emphasize by sharp -- by chart on the right-hand side of the slide, 25% already pre-let, let's remember Louvré SaintHonoré among others. So 25% already pre-let. And finally, well, we monitor, of course, not only the cost that we are incurring in these properties, but also the return that we envisage and, therefore, the yield on cost. As you can see in the chart, the gross rental income of our project pipeline has been reviewed already a couple of times. We are now envisaging already EUR 85 million coming from this pipeline. As you can see, there is a trend going up of what we could expect from this pipeline, which are a good news. And therefore, the yield on cost is also being not only confirmed, but, let's say, revised upwards and now it's 6.6%. So that's the second value driver or growth driver. Within this one, maybe a comment on Mendez Alvaro. Mendez Alvaro, now -- this year, the project is really taking off. On Page 40, you can see a little bit of the details. We expect the majority of this project, of course, to be offices. But because of the possibilities that this project is offering us, we probably will tend to bring these offices within a bigger picture of what could be seen as an urban campus that would not only have offices, but high-end residential and also some retail amenities. So hybrid use, no? We, of course, are working very hard on the ESG component. So we expect this to be net 0 carbon emission project. And finally, the fundamentals of this project remain very strong. Look at the yield on cost that we envisage for this, 8%. Look at the ungeared IRR, which is 10%. On Page 41, another comment on this value driver. You can see here another way of looking at what we could expect from this pipeline. You can see that basically our pipeline means a total cost of EUR 1.3 billion, roughly speaking. Here, what we try to highlight and provide a little bit of a hint is the comparison between the KPIs that we're expecting from this project, meaning the kind of total cost in terms of euros per square meter and the yield on cost and give a flavor of where the prime market reference can be in terms both of capital value and prime yield. So if we do some math on this, we can see that we could talk about close to EUR 2 per share of additional value being created. So if I said #1 growth driver is prime positioning, #2 is the pipeline, #3 would be capturing reversion. We mentioned before that our NAV growth is being based on Alpha projects and yield compression, but also on rental growth. Well, the good thing of the Spanish market these days is that it has a high level of turnover because the maturity, the expiring date of our contracts, it's short term compared to other countries. We expect 46% of our portfolio to mature between 2020 and 2021, which is key to benefit from these release spread that you can see that we have been capturing recently, and therefore the kind of reversion that we can extract from market conditions. Also in Page 43, I would mention the value coming from our renovation program. We've been delivering some projects like 106 Haussmann. We are progressing now on projects like Torre Marenostrum, Charles de Gaulle, Ortega y Gasset, Cedro. We are also reloading our renovation program with new investments in projects like Diagonal 530 or Grenelle. And in the next page, in Page 44, you can see a little bit of a view of the kind of reversionary potential on gross rental income that these projects may have with -- are leading now to a stabilized gross rental income of EUR 33 million. Our value driver -- growth driver #4 is not our current pipeline, but whatever else that we may acquire. We've been flagging that we are working on different potential targets with a rough number of 1 billion of opportunities. Well, you have already seen that we've delivered the first EUR 115 million year-to-date, basically, with investment in what we call Parc Glories II, and also quite much more smaller, but also significant Recoletos. So we are on track, and we remain under analysis of other things that I would like to mention that are mainly in CBD and can be both core or value-added in terms of profile. In Page 46, just to remember that what we have already bought. In terms of location, it's very central. Here, you can see where Parc Glories is, which is side-by-side with our Parc Glories I, which has been a real success and where Recoletos is, that it's very close to another property that we already own. On Page 47, you see the details of Parc Glories II, maybe the picture is a good one because you can see that there is a walking distance between the Parc Glories II that we just bought and the Parc Glories I that is now up and running. If you remember the KPIs of Parc Glories I, it's fully let. It's been an excellent investment in terms of performance. We have also very good expectations for Parc Glories II. The acquisition price has been EUR 5,600 per square meter. Based on the kind of rent that we're having, as I said, around the corner, we expect a yield on cost above 5% and an ungeared IRR between 6% and 7%. On Page 48, the Recoletos acquisition, it's a rather small one, but it's also, again, an example of our focus on prime CBD. Here, we've bought at EUR 7,000, this 700 square meters of floor plates, which is another very interesting investment. And the last angle that we -- it's worth talking about when we talk about acquisitions is to compare where is the investment market with our existing portfolio. This is another usual slide that we often disclose. Here, you can see the map of where our properties are in Madrid, Barcelona and Paris in the blue dot and the green dot is where the recent transactions are taking place in the market. And here, there are 2 things to summarize or highlight: One is the comparison between the average of the capital value per square meter that is being paid in these transactions with the Colonial average taken from our appraisal at year-end of 2019. And you can see that for Madrid, for Paris and for Barcelona, there is a gap that leaves us very comfortable about the potential upside that our appraisal may have in the future. And the second way of looking at this is to compare the implied yield that this -- our property is half compared to the yields that we are seeing in the market on recent transactions. So in Paris, for example, our implied yield remains at 3.21%, where the market is already below 3% for the kind of properties that we own. And in Barcelona, we remain at 4.4% and in Madrid 4.3%, where the market is already between 3% and 4%. The -- our fifth element of growth that we mentioned in Page 50 is about investment and disposal. I think that we're already proved in the last years that we are buying quite well in terms of our expected yields on cost or expected IRRs and that we are consistently selling in good terms referred to our valuation parameters to our appraisal parameters. So we believe that this can be another source of value for the future. And a final comment on the future. Just to summarize, that we are a company that we are slightly above the EUR 350 million of rents per year. If we work out everything that we have inside the company, not outside the company, inside the company, we expect to put the company at the level of EUR 500 million at the end of this delivery of the existing pipeline that is between 2 and 3 years out from now. So we remain confident, therefore, about our future. To summarize, Section 6, it's a little bit of a conclusion and outlook. On Page 53, it's a little bit of the same that I'd mentioned at the beginning. What we share with you today is an outstanding set of financial results, an NAV growth of 14%, GAV growth like-for-like of 9%, our gross rental income like-for-like of 4%, and EPS growth of 23% among all the numbers. So very outstanding results. For us, the main reason is the strong operational performance that we're going through. I insisted a lot in the high level of activity that we are going through. Of course, full occupation that we have -- occupancy that we have in our buildings and robustness that the strong growth that we see in our rental prices. This, together with the performance coming from our Alpha strategies, in the end is what explains this 15% -- 14% of EPRA NAV growth. As I said before, it's a very rough approach, but 1/3 -- less than 1/3 coming from yield compression, another 1/3 coming from rental growth, another 1/3 coming from Alpha. In the end, that's the story of Colonial as of today. In Page 54, a little bit of outlook guidance 2020. At the beginning of the year, maybe there is not much that we can say of this. We cannot be very precise, but yes, we would like to share with you some hint of where we can expect to be. First of all, you've seen that we are almost fully occupied, but maybe our pending issue is to achieve this full occupancy for Madrid, which remains with a 4% vacancy. I think that we are convinced that we will slash this to half during the course of the year. So I think that we expect strongly this vacancy reduction going further down for the Madrid market. On prime rental prices, you saw that we already crossed EUR 900 per square meter in Paris. We'll see that -- we think that this momentum should be confirmed in the same way that in Barcelona and Madrid. We should be targeting EUR 30 in Barcelona, EUR 40 for the high end in Madrid. And talking about like-for-like, we believe at 4% for 2019. For 2020, it is difficult to be specific in February, but we would say that roughly speaking, we should be expecting a little bit of the same for 2020 the way things are going now. If we talk about the portfolio management, you saw the project pipeline with increasing rents that I mentioned just a few minutes ago. So I think that this also shows a good profile. We are reloading our renovation program. So we expect also upside for this. And the acquisition program, we expect to deliver additional news to the EUR 160 million that we have already acquired. Talking about disposals, there's nothing major that we expect to happen with our portfolio. We mentioned in previous meetings that we've done everything we wanted to do, in particular, what we wanted to dispose from the Axiare acquisition. What you could see is some selective noncore disposals coming, but we are going now under the analysis of these opportunities. So that's it so far. Thank you very much for your attention. And now it's time for Q&A. So thank you, and let's see what kind of questions do we have. Thank you.

[Operator Instructions] We already have a question from Jonathan Kownator from Goldman Sachs.

I have a few questions, if I may, please. I haven't seen a confirmation of the dividend that is going to be proposed, so if you have the number, that would be helpful, maybe a bit of color around that. You have mentioned [ EUR 220 ] of potential revaluation gains from the pipeline. Can you please confirm if that number -- is part of that number has already been included in the NAV or not? Other question on the renovations, not the pipeline, but the renovations, can you confirm the amount of CapEx that you intend to spend on that? And then perhaps one other question on Barcelona. Can you perhaps comment on the potential increase of supply by 2021? Is it something that could reverse a bit the dynamics of Barcelona. And sorry, last question. Are there any update on the Netixis building in Paris?

Okay. Thank you. Let me go to some of these questions and then leave the floor to Carlos or Carmina. On the dividend, the dividend has not been specifically decided yet, but we expect that we'll be very close to a 10% increase up compared to the year before. It's a little bit of a sort of long-term strategy that we have here. So we would expect around 10% growth compared to the figure of last year. I will give the floor to Carlos to talk about the pipeline and the renovation program. On Barcelona, I would say that what's going on right now is maybe, as you know, the hottest part of the market in Barcelona is the 22@. In the 22@, the town hall has come with some measures in order to balance the kind of development that we should see there more in the direction of residential compared to offices because maybe the mix is not the right one. The things go this way -- the things go as of today. We don't expect this to have a major impact in the big numbers that we see there. By the way, 0 impact, if any impact is positive on Colonial properties. But -- so we expect a short-term supply of 150,000 square meters in that area of Barcelona, let's say, in the short term, that could go up to 300,000 square meters more on the midterm. But beyond that, because of this new policy that the town hall has on this, we would not expect any other additional supply. And moreover, I would say that this new policy from the town hall, I think, that could stop a little bit some of the developments that we could expect for the next -- yes?

Correct me if I'm wrong, 350,000 square meters is a lot of supply for Barcelona, no? I mean, obviously, the vacancy is really, really low, but that sort of supply, no?

Well, I think that for the overall market, if you're talking about 5 million to 6 million market, it's something that is reasonable. And particularly, if you look at the take-up of last year, I think that is something that we are comfortable with. It's not a very high number in our opinion.

Okay.

On the pipeline and the renovation program, Carlos?

Okay. Regarding the pipeline, if you look at today's cost acquisition, cost plus future CapEx, and the question is, how much in addition has been so far crystallized on the project, we have seen we have had progress on Louvre and some small progress on other assets. So we have roughly a little bit more than 300 -- roughly EUR 350 million crystallized. However, having said this, when Pere talked about the future potential, if you look at today's figures, if you look at the metrics of these assets, there's still a very, very significant future value creation potential, in our opinion, quite close to the figure that Pere guided, but this you have all the information to really...

So should we be thinking about it as [ EUR 220 ] minus the equivalent of EUR 350 million. Is that how we should think about it? Or was that [ EUR 220 ] on top of the EUR 350 million.

How we should think about it is that we -- when we see that the total cost is EUR 1.3 billion, acquisition cost plus CapEx to be invested, that on top of this, roughly EUR 350 million has been crystallized.

Okay. Fair enough.

And on Netixis, Jonathan, by the way, no particular news as of today that we have...

But do we have a departure date at all or not yet?

Not yet.