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

Welcome to the Inmobiliaria Colonial Capital Markets Day 2020 presentation. The management will run you through the presentation, which will be followed by a Q&A session. [Operator Instructions] I'm now pleased to introduce Mr. Carlos Krohmer, Chief Corporate Development Officer. Please go ahead.

Good afternoon, everybody, to our -- this year's Capital Markets Day. This year, due to the circumstances, it's going to be a virtual Capital Markets Day and we hope that the next one will be, again on the ground, seeing all of you in person. We have prepared for today basically 3 presentations. We will start with an overview and update on the office markets, and we are very grateful to have with us Reno Cardiff, International Partner and Head of Capital Markets from Cushman & Wakefield, Spain; and Mrs. Magali Marton, Head of Research of France, Cushman & Wakefield. After this 20-minutes presentation, Carmina Ganyet, Corporate Managing Director of Colonial, will do a performance review of our latest results and putting them in context with the market. And after that, at 20 to 7, Mr. Pere Violas, our CEO, will do a review of our corporate strategy, with the opportunity for all the analysts and investors to do some Q&A until 8 in the afternoon. And with this, I pass over to Cushman & Wakefield.

Thank you, Carlos. Real pleasure to be here. Good afternoon for those in Spain. Good evening for those perhaps in the north of Europe. What we've tried to do today is cover, obviously, in a limited period of time, the markets in Paris, Madrid and Barcelona. We'll start off, first of all, with Paris, and we have Magali here, who will run through those particular data points in detail. We've tried to structure the presentation the way that we'll be talking a bit about capital markets. We'll be talking a bit about investor demand, occupier activity and other relevant takeaways. So Magali, with your approval, could you kick off, and I will follow?

Okay. Thank you. Good evening, everyone. So my name is Magali Marton, Head of Research for Cushman & Wakefield here in Paris. Happy to be with you this evening to share a couple of slide regarding the France and more precisely, the Paris market. I don't know who will manage the slide, so I am in Slide #2. And if you're okay with that, you will move in Slide #3, to have the first look on the investment volume in terms of commercial real estate assets, so including office, retail, logistics and light industrial on the French territories. There is no surprise here regarding the volume in terms of investment activity on the French market. So at the end of Q3, we have recorded EUR 17 billion of investment, which is volume down by 27% year-on-year, but it's still quite above the 10-year average we have recorded on the market over the last 10 years. So no surprise in terms of decline in terms of investment volume. But at the same time, we have still some activity on the market, and you can see on the right of the slide, the split of this volume by asset class. It's the kind of main characteristic of the French market to be dominated by the office sector, which represents more or less 70% of the total volume in commercial real estate market, and it has been stable from a year to another one. There is very little changes in terms of investor appetite by [ class of ] asset. So still strong. Okay. Can you hear me?

Yes, yes. Sure.

Okay. Sorry. So very little changes in terms of investors' appetite and strong, very strong appetite regarding the office segment on the French market. Also, 2020 will be quite far from the record level we have in '19 because we have reached more or less EUR 40 billion of investment on the French market. And what we expect at the end of this year is to reach 25, 20 -- EUR 24 billion, EUR 25 billion of transaction, 70% of this volume will be dedicated on office. So there are still some capital ready to be invested on the French market. Office is a target. And in the office market, what we have noticed over the last month is really a high level of selectivity and really a strong appetite from investors for very prime assets, the most secure location in terms of leasing activity, and we will go through this in detail in a couple of slides. If we move to the next slide to have a look on the trend we can see regarding prime yield across markets. So clearly, we have seen a huge compression in terms of prime yield for office, retail and logistics on the French market. Something quite interesting to see, 2020 is a kind of stability regarding the office segment. And for prime, of course, I am referring to the Paris CBD office yield. We are clearly above 3% -- sorry, below 3%, 2.75% in terms of prime yield on Paris CBD based on transaction we have recorded since the beginning of the year. And clearly, regarding the true segmentation of the market, we expect to see this yield to move below and probably reach 2.60%, 2.50% by the end of the year or the beginning of '21. And the trajectory, the trend we have in prime yield regarding office is quite different from the retail segment, where we have seen prime yield moving out and increase, and for sure, we expect more and more increase in the future. So there is really -- the trend we see on the office prime yield is a clear demonstration of strong appetite of investors regarding the office market, with the high selectivity and there is really a pressure on the market where opportunities for such quality of office assets are limited. So there is a strong competition between the buyers, which lead the prices to go up with the time. If we go to the next slide, so it's a very detailed map of the greater Paris region, some market. So Paris CBD is the area on dark blue in the middle of the map, so clearly, we are below 3%, and you can see the arrow in red just side-by-side, the figure, meaning that what we expect is really to see the yield decline further at the end of this year or beginning of next year, which is clearly that the nature of the leasing market is reflected by the level of the yield we can see right now on the greater Paris region with a strong segmentation between leasing market, where we have to move with some cautious regarding the low level of take-up and high level of vacancy rate, meaning that our expectation in terms of rental value is not so good. And on the other side, a very secure market, the Paris market, Paris CBD, especially, where take-up has been low this year, but in the long term, we expect a rebound in terms of leasing activity with a very low vacancy rate. So meaning that on the leasing side, we are quite optimistic regarding the rebound of the market activity, the leasing activity, supporting the rent and probably a surge from the occupier for very qualitative assets. And you can see that in the level of the yield and the trajectory and the trend we expect in the near future. Next slide, please. Something quite interesting, and it's specific analysis we are doing here with the team of capital markets in Cushman & Wakefield, France. It's about splitting the office investment volume by risk appetite in order to understand what is the segment which is really sought after by buyers and which has been clear for over the last 6, 7 years is that the core segment is really the one which is the most attractive and the most active on the market, more than 50% of the investment volume on office in greater Paris region for assets above EUR 20 million in terms of lot size has been done on the core segment. So security in terms of leasing income, rental income will be key in the near future. And for this quality of asset, investors are able to pay a quite high level of pricing. On the other hand, we see very, very little opportunistic deals, meaning that the security of the leasing condition and the leasing condition of assets will be key in terms of choice of allocation of capitals to be investing in the French market in the near future. Last slide, just to summarize what we have seen regarding the Paris office based on information we have collected in Q3 this year. Just a couple of trends to pick up from this slide. Of course, a strong reduction in terms of level of take-up, but we come from a very, very high level of activity. We have recorded a period of time from '16 to '19, which take up close to 1 million of square meter, which had been a record level. So it's another way to maybe to relativize the impact of the slowdown in terms of take-up over 2020. We have some good indication regarding the rebound of activity in the near future, in 2021, and we are confident regarding the capacity of the Paris office market. When I say Paris, I said Paris City, to attract a large scope of occupiers searching for central location, good connection with public transportation and very qualitative office spaces. And if you are thinking about the greater Paris region office market, the place to be is really Paris, and we are quite confident regarding the comeback of occupiers in this market probably in the middle of next year. What is quite interesting to pick up on this slide regarding the office rent, you can see here the level of rent on the prime segment in Paris CBD, North-East and South. Despite the slowdown in terms of take-up seen in 2020, prime rent has continued to grow on the Paris CBD and we expect to display EUR 900 per square meter per year at the end of the year. We have still some occupiers keen and ready to pay this level of rent for super prime, very qualitative office spaces and in this level of rent, we have some strong demand coming from law firm, financial companies, advisory companies. So we are quite confident to see this one continue to grow in the near future. And the reason behind that is because we have a very low level of vacancy rates: 3.5% on average regarding Paris City; 2.5% if we focus on Paris CBD; and couple around this month, we are below 2%. And in our projection, vacancy rate over the last 2 years, we don't see these vacancy rates increasing in the near future. So even if we have less demand, we will have a very limited supply immediately available. And if you have a look at the future supply, the chart on the below right, you can see that in terms of deliveries in terms of project under completion or with building permit, we will have less and less renew of the new supply and Grade A supply. So it means that we have very few capacity to welcome new occupier regarding the immediate supply, very limited future supply, so we are quite confident regarding the trend in terms of prime rents in the near future for Paris CBD and Paris at all.

Excellent.

That's it for me, I think.

That's incredibly interesting. Thank you very much. With everybody's approval, we'll move on in terms of the Spanish market. If we could change the slide now and start off in terms of the presentation covering both Madrid and Barcelona. I think an understatement here. As one of the most eventful years in global real estate draws to a close, I think it's always good to look at where we are in terms of the Spanish context. Starting off, and again, I'll probably echo many of the comments made by Magali. As of Q3 this year, investment volumes for the entire Spanish market stands about EUR 6.5 billion. We estimate total volumes for 2020 to get to about EUR 7.1 billion, EUR 7.2 billion. Quite interesting, if you look at the average 10-year position, we were at EUR 6.6 billion. So I think at the end of this year, we'll still be about 10% above that average. Looking at the top right-hand graph, offices continue to be the favored asset class. We've seen a slight variation this year in terms of retail but essentially reflects some very large retail transactions at the beginning of this year in January and in February. I think what's important to add is that looking at these numbers, Spain, like many other European countries is an important destination for international capital. If you look at previous years, we've had about 70% of our investment volume from international players. Clearly, the impact of COVID has been particularly important with the restrictions in terms of mobility, which has impeded the ability to obviously inspect assets and take forward transactions. If you look at the graph, we are anticipating an improvement next year, obviously, subject to an improvement in terms of mobility, but we are noting some improved sentiment overall. We're anticipating investment volumes arriving at a total of about EUR 8.5 billion. If we go back to 2020, current investment in offices as of Q3 is about EUR 1.75 billion. We believe we will arrive to about EUR 1.92 billion for the entire 2020 numbers, comparing that to an average of about EUR 2.2 billion over the past couple of years. If we go to the next slide, please, which is our opinion in terms of cap rates. And again, something very similar to what we're seeing in other countries. I think it's evident across the board that we are seeing a real focus in terms of the best quality stock in the market. It's also evident that there is significant liquidity. The problem is actually finding that particular product. We are maintaining our cap rates for the best office buildings in Madrid and Barcelona. In Madrid, we're marking a 3.25% cap rate; in the case of Barcelona, a 3.5% cap rate. The problem is for many investors actually trying to find the right product. It's not just doing a deal or getting one done, it's actually doing the right deal. It's interesting to note in the context of us maintaining cap rates across the main Spanish cities that the average cap rate for prime offices in Europe has actually reduced by about 10 points over the past 9 months. So again, an interesting reflection in that regard. Clearly, when we look at capital markets, we're looking at one side of the coin. It's important to also understand where we are in terms of the occupancy market, so we could move on, please, and look at the next slide. I would say, before we talk about occupancy and we look at the occupancy diagrams and figures, I think the focus this year for most companies, I think, across the globe, has been ensuring that staff are safe and well, reviewing how they get back to work, when they get back to work. The future footprint for those particular companies and obviously, trying to resolve the issue of Zoom and Teams' fatigue, which I think we're all suffering to a greater or lesser extent. Unsurprisingly, if you look at the graphs on this particular page, the position in Spain, similar to the position we're seeing across the board, Q3 take-up numbers for Madrid and Barcelona were down. In the case of Madrid by about 40%. We currently stand in terms of gross take-up for Madrid, first 3 quarters of 2020 at about 237,000 square meters. The position in Barcelona, we're about 60% down on 2019 figures, although the number of deals remains the same at about 126,000. What we are seeing and what we are reviewing with our agency teams, we do foresee a pickup probably from quarter 2 next year, quarter 2, quarter 3. We've actually dared to give some estimations, which are positive estimations in terms of future activity in the letting market, which is particularly important, obviously, on the back of positive Spanish GDP growth in 2021 and 2022. If we look at the bottom 2 graphs, we can see that generally, vacancy rates have maintained pretty stable in both Madrid and Barcelona. We've seen certain uptick in terms of percentages. We now stand at 9% in Madrid and 5% in Barcelona. That said, I think for me, I think for us, looking at gross vacancy rates or total vacancy rates is often misleading. The real key here is to understand where the vacancy rates lie in each submarket or asset class. And here, if you look at the bottom left-hand and right-hand graphs, we can see the position is incredibly different. If you look at the Madrid vacancy rate, the vacancy rate in CBD and city center is 5% and 4% total amount. And if we're very clear in terms of numbers, that equates to about 66,000 square meters available Grade A space. The position in Barcelona, again, is very similar at 3% and 2%, but in the case of Barcelona, we've only got about 18,000 square meters of vacant space at this moment in time. If we mention a bit about the development pipeline coming forward, we've been analyzing in quite some detail the pipeline in both Madrid and Barcelona. In Madrid, over the next 3 years, we're estimating about 3% of total stock coming on to the market. Most of that is refurbishment. Most of that is located outside of the CBD. So very similar to the comments we've heard in terms of Paris. We don't see any great movement in terms of CBD vacancy rates moving forward. Barcelona, the position short term is incredibly tight. If you look at the development pipeline for 2021, we've got about 41% of that is pre-let, but obviously, a larger amount of space coming on 2020 to 2023. The problem we're having is that many of those projects are actually being pushed out in terms of timing, so it's hard to define the actual impact in terms of gross stock. But I think if we can go to the next slide, for me, this is really, really important because it's not just the vacancy rates, it's not just the dearth of available space in some of these segments of the market. It's what the demand is actually doing. And here, we've done some quite detailed analysis in terms of what occupiers want moving forward. And I've gotten this graph here, some work we've just completed. And what we're actually seeing is that across the board, we're seeing a clear focus on those buildings that offer experience, efficiency and in many cases, sustainable real estate. And if we look at the Madrid and -- the Barcelona and Madrid markets combined, we've seen an increase in terms of focus on the best buildings, which are generally located, but exclusively, they're generally located in the city center or the CBD, moving up from an average of deals being done in the best buildings from 36% to 46%. But what's really clear if we look is that the focus in terms of CBD is clearly quality, all right? Where we have 62% of the transactions done in the CBDs of Madrid and Barcelona are focused on quality assets. And we looked at the average for the 10-year period at substantially less than that. So if we could continue, all right? Now I think no presentation is complete without, in this case, a comment on rental levels. And if we move forward in the presentation, we'll get to the graph in terms of rents. Just a few comments before I start off with rents. We've done some quite detailed modeling both prior/during COVID to understand the potential impact of the COVID position in terms of the markets. I think it's clear. I think we're seeing across the board the direct impact has been hard. But obviously, talking to the agency teams, talking to the investment teams, the latest news on vaccines we believe is giving us more positive news. And I think it's clear to say that the COVID position for us in terms of a cyclical issue is short term. That said, I think what we're seeing, the impact of COVID on the structural position regarding the market will be more profound in how people use buildings, the importance of quality real estate, the experience of that space, efficiency, sustainability. But if we go back to the rental position, our numbers have been indicating that the adjustment in terms of rents have been -- I'm talking about prime real estate here, around 5% across the board. But from those numbers, we're also seeing important variations. I mean we're talking about prime here, adjustments in the REIT of about 5%. But at the same time, we're seeing a number of deals done in prime whereby the owners have maintained the headline rental level but has increased, in this case, the incentive package. So therefore, keeping to the -- in the case of Barcelona, EUR 28.50, in the case of Madrid, EUR 35.50. So there's a whole mixture of stuff in terms of -- obviously, depending upon the tenant coming in, the lease terms offered. There's no rule for one, and everyone, it comes down to a building-by-building basis, but we're seeing a variation in that respect. What I would end up saying, and I think I'll just go to the last graph and just complete some comments. I mean looking at the market moving forward, and we've been analyzing the potential impact of growth in the market in the short to medium term, and I just wanted to share with you some -- for me, some very positive work that's been done by Oxford Economics and Oxford Economics, it's not by Cushman's, by Oxford Economics, they're estimating it's actually on a pan-European basis, and we're waiting with some updates in this regard, but they're looking at growth potential for employment and essentially, knowledge-placed employment, which accounts for about 50% of GDP in the European context. And the winning cities that they were referring to were #1, London; #2, Madrid; and #3, Barcelona. And what we've actually calculated here is the potential impact based on their studies, their latest study. We need to understand if there's any update in that respect. But what we're seeing clearly is that between 2021 and 2030, we're seeing an important increase, an increase of 1.8% compound in terms of employment growth across the board compared to, if I recall, the European average of about 0.9%. So I wanted to finish on that particular slide. I hope that's been clear and concise, as requested. And thank you again for listening and your time this evening, this afternoon. Thank you, Carmina. Thank you. Carlos?

So thank you, Reno and Magali. In benefit of time, we now want to continue with Carmina's presentation, and we will keep the Q&A for the end of the 3 sessions. Unfortunately, Reno and Magali won't be available at that time later on for the Q&A session. But you can send us overall the questions that you may have on the market part. We will revert them to them, and they will send you the replies directly to you so that you have all of your questions answered. And with this, I hand over to Carmina to start with the performance review.

Okay. Thanks, Carlos. In these sections, we are going to remind you the operational performance year-to-date; some comments also, not in absolute terms, our performance also in relative terms comparable to our peers; and some final words about the balance sheet management that we have been done in the last quarter. So to remind you that we released a very solid set of results in the quarter. 8% increase, as you may know very well, on EPS. EUR 0.22 per share. Basically, with -- all-in-all, based on an unparalleled prime portfolio, which we have been built in the last year, 76% exposure in the CBD, 61% of our portfolio exposed in the Paris market, and as you know very well, 93% with the high standards of BREEAM & LEED energy certifications. That means that during this year, we have been gone through like-for-like gross rental income of -- in offices of 2%, 5% in Madrid, 7% in Barcelona and flattish in Paris. And more efficient, and as you know, that we would like to improve the efficiency of our buildings, our office like-for-like net rental income also increased 4%. As Cushman was -- very clearly stated, what this means in the CBD market is a lack of good product, a lack of Grade A assets. That means that our portfolio, as you know, we have the benefit to have a very low vacancy rate, 4%, also a high level of collection rate during the last quarter, 98% in offices, 96% in the total portfolio. And we have been also doing a very actively letting activity close to 70,000 square meters. And also in the last month, close to 7,000 square meters additionally to our letting activity, meaning more than 50 transactions year-to-date. That means that thanks to the profile of our clients, thanks to the profile of our portfolio, we have been able to capture a very impressive double-digit release spread, 25% in average terms: 51% Barcelona; 20% Madrid; and 14% in Paris, and also a very interesting rental growth comparable -- comparing the new contracts and the ERV December '19: 7% in Barcelona; minus 1.6% in Madrid, but there is one special contract, we saw that contract at Madrid showing 4% positive rental growth; and 10% in Paris. In the next page, we remind you the update about the conversations we've had and we have been having with our clients due to the COVID and due to the lockdown period. We have finished all the conversations, all the negotiations with our clients. Exactly 41% of our clients, we have been approached by them. Today, all the negotiations have been finalized. With year-to-date impact confirming EUR 10 million discount, which represents this year because of IFRS rule, because of the accounting rules, this year will be impacting 3% gross rental income. Potentially and for being prudent, our potential estimation in the potential second wave, not linked to any specific file, but our best estimation, if there is a second wave, we could estimate an additionally 1.5% maximum impact 1.5 -- 1%, 1.5% of gross rental income. This does not mean that this is a specific conversation linked to that, but this is our best estimation that potentially our prudence tell us that could be the maximum impact for this second wave. In the next page, we remind you the levels of the collection rates and discounts. So the collection rate, as you may know, the 3 quarters was for offices, 98% total group: 100% in Paris; 95% in Spain. And all users, including the other users, which, as you know, we don't have a very material exposure to other users, the total collection rate remained at the levels of 96% specifically. So all in all, it means that a very solid fundamental, as you know. That means a very low vacancy rate, 4%, in line with the previous year in 2018, and 2019, the vacancy rate of our portfolio was in line at the level as we have today. Also for rental growth, so we have experienced a 5% rental growth during 2020 in line with the previous years: 8%, 2018; 6%, 2019. And again, in terms of release spread without -- if we look release spread, a very impressive 25% release spread during 2020 in line also with the previous years in 2018 and 2019. And if we look at these ratios in a quarterly basis, in the next pages, you see here, of course, will be always subject on the contract, the specific contracts that we renew each quarter. And also, it's subject also to the project, to the renovation also program that's coming into operation in each quarter. But basically, you can see here the profile of the rental growth and the profile of the release spread that we have been showing in the -- in all the quarters in 2020 in line basically in average terms, as we show in the previous years.

Ladies and gentlemen, the speaker line has dropped. Please hold your lines while we try to reconnect the line. Thank you. [Technical Difficulty]

Yes?

Yes, speaker, you're connected. Please, go ahead.

Sorry, I think -- I don't know in which page I -- because the line was cut. But I was in Page 10, showing the profile of our rental growth and release spread in -- during 2020 and also comparing this data with the previous years. And I was saying that all of them during 2020 has been in line in average terms as we provide and as we achieved in the previous year in a quarterly basis. As I state, it's very subject to the specific contracts that are going to be reviewed. Also, it's subject to the specific projects and renovation program that is going to be entered into operation. But basically, in average terms, we are showing very impressive rental growth and release spread in line with the previous year. And in the next page, I was saying that should be comfortable and confident about providing in the future this rental growth and release spread. And in Page 11, you see how could be our price potential reversion in all our contracts, so how all our contracts are related to the ERVs in the market today. And what you can see here is that Barcelona, all the portfolio in Barcelona is under-rented 16% when we compare the passing rents with ERVs during 2020. The same happened in Madrid, 8%, and 7% in Paris. So we have buffer enough to pass this, I would say, COVID period, to pass this slowdown in the take-up because all our passing rents are well above where we lost, sorry, the ERVs in the market -- the market levels at June 2020. But how compared with the strong performance with our peers, we don't -- we also like to look at our peers, and we like to be not only to do better, being also the best in the market. And in the now following pages, you can see how this performance compared to our peers. First, in terms of vacancy, Colonial portfolio shows the lowest vacancy in terms of average with our peers. So the average shows 6% in comparison to 4% of our portfolio. Also, below market levels, as you can see here in the same page. Another way to look at how we performed in comparison to our peers is how we show the release spread. We need to say that not all the peers show in a very transparent same way the release spread. We show, as you know, every quarter, the release spread. And as you can see here, the ones that are disclosing these figures, the average are in line of 7%, June 2020; 10%, September 2020; well below our release spread that we have disclosed on a quarterly basis, 25% in the last quarter, as you can see here. Also, we’d like to compare to other metrics like COVID impact, we didn't show here. But if you have had the opportunity to look at our peers, the ones that show very transparently the COVID impact, Colonial showed the lowest ratio in terms of COVID impact in our gross rental income. Last comment about our balance sheet management. As you know, and I think we had the opportunity to discuss with some of you when there is a lot of volatility in the equity markets, we tend to look at the bond market. Basically, the bond market during this month were more in line or tracking more fundamentals of the companies. And we can -- we show here how our bond spread has been behaved during the year. If you look at, for example, the reference of 2026, our bond expire in 2026, basically, today, the data spread shows 100 basis points, below the levels that we had last year and, of course, well below the level that we had at the beginning of the COVID period. So that shows that the bond market is supporting Colonial, a paper like Colonial who are risk like Colonial following the fundamentals. And this has been also confirmed by the rating agencies. As you can see here, like Moody's and S&P, confirming the stable outlook for our company, basically based on the leading position in the prime and French and the Spanish office market, the high-quality office portfolio, the strong liquidity position, a stable vacancy rate and also the recovery activity that we have been showing during the year. Thanks to the support also from the bond market and the fixed income investors. In the last quarter, we have been going again to the debt market, raising EUR 1.5 billion between new issuance bond and new credit facilities. To remind you that we raised EUR 500 million bond that has been 3x oversubscribed with a very, I would say, strong support, very important tickets above EUR 100 million, a very, I would say, loyal -- high degree of loyalties of names, 50 new accounts. So very happy and confident that in the future, we will repeat these transactions and thanks to the support from the bond market. And additionally, we have been going to the institution -- to the financial institutions to raise EUR 1 billion credit facility. It's a sustainable credit facility linked to the GRESB rating, which has been a very unique conditions in this market with 7-years maturity, 5 plus 1 plus 1. And as you can see here, the covenants that are based -- new revolving is a loan to value below 55% and ICR of 2x. So very, I would say, confident and provides a very interesting source of liquidity for Colonial. Thanks to this actively balance sheet management. In the next pages, you can see the profile of our debt, extending the maturities from '21, '22 until 2027. In Spain, also from 2023/'24, extending 4 years until '28 and also the new credit facility providing liquidity for more than EUR 2.4 billion. And here, you can see the solid financial structure, we show with a net debt of EUR 4.5 billion. Loan-to-value, it's all being updated, the valuation of 36.5%. An operational net debt-to-EBITDA of 13x. The liquidity, as I mentioned, close to EUR 2.4 billion and with a debt maturity of more than 5 years with a total cost of debt of 1.71%. So as a conclusion, solid fundamentals on the operational side, with a very limited impact of the COVID, potentially -- prudently, a potential 1.5%. But today, all the negotiations are closed, with a total impact of 3% gross rental income. Not in absolute terms also in relative terms to our peers, we are performing better than our peers with a very strong balance sheet, thanks to the very active management on the balance sheet, and we can confirm you the EPS that we expected for 2020 in average in the range of EUR 0.26 per share, including, in a very prudent approach, this second potential wave impact on the COVID.

So thank you, Carmina. This is Pere Violas speaking. And now we step into the part 3 of this presentation today. I'm on Page 3 of my presentation. I would like to cover 2 topics, 1 very briefly and 1 more deeply. First of all, I will refer to where we are within the framework of a guidance that we can give you about where the company sits by the end of this year. And then I will go more in depth on a more deep discussion about our strategic positioning of the company. It's a topic where we would prefer to have a physical meeting, hopefully spend some hours, if possible, to discuss many topics as in depth as we can. Today, the time is more limited. So I will provide a little bit of an overview, and we are always available to go more profoundly through this topic. About the first part, the guidance, Page 4. We expect this year to finish with a top line of EUR 338 million so around EUR 340 million. The EPS, we expect it to end around EUR 0.26. And we see the outlook as at least a transition one. 2020 and 2021 being years where we reload our growth profile; and '22 onwards, we have come back to double-digit EPS growth. This, of course, is the consequence of the current macro scenario now that we are going. The second part of the guidance will be related to ESG. ESG updates are very interesting, quite recent. By the way, we've become aware of our rating regarding GRESB, this year, 2020, our rating is up 17% as we will see more in detail in a few minutes. Also, Vigeo is at high end with a strong year-on-year momentum. And just recently, CDP score was confirmed at a level of A minus, which the score confirms our decarbonization leadership. And anyway, as a general statement, our carbon footprint decrease remains ongoing as expected. Regarding the capital recycling. We have already delivered year-to-date around EUR 240 million of disposals. We believe that further disposals will amount for circa EUR 300 million. We see everything going in line with our expectations. So this disposal strategy that, as you know, it's not a recent one, it's something we've been doing for 2 or 3 years already, remains, as I say, as expected. Also, at the other end, our project pipeline maintains its momentum. And we do not rule out selective acquisitions in the midterm. We know our strategy after solid years of growth, organic and inorganic. We decided to enter into a flight-to-quality strategy. And that meant a number of divestments, which we are delivering as we speak during this year. The main message today is everything is going as expected. We have already shown some part of this delivery. The rest will come, we believe, as expected, in the near future. The second part of the presentation is a more tricky one because basically here, the goal is to provide a little bit of additional clarity on our strategic positioning. And we believe this is necessary because Colonial as a company has always been a simple company to understand. What do we do is simple, we do only office, and we basically believe in prime CBD. And the fact that we are so consistent could lead to anyone to think that well, that we'll remain stuck in an old-fashioned definition of the company, that this definition is quite backwards looking, but we do not think about the current challenges that you have in front of us. And therefore, that maybe that we are not pretty well positioned for the scenario that we have in front of us. And basically, we believe we are positioned in the best possible manner for the challenges that the market is providing us. And here, I'd like to go a little more in depth, providing additional levels of strategic thinking, additional layers of clarity in what do we do and what we intend to do in the future. Basically, for us, the clue is that when you think about the future, basically, you realize that clients are demanding the question to 3 things: efficiency, meaning flexibility, meaning productivity; they are demanding, requesting environmental issues, which means excellence on ESG and decarbonization strategies; and the E of experience, which means attraction for clients that will love to be in the office. These 3 E, our kind of positioning, is what we believe is the demand of the market. And our basic statement is that we believe that the prime CBD positioning allows for the best answer to these 3 different challenges, to these 3 different requests, as we will now discuss more in depth. Point 4 and point 5 are devoted to say that these are positioning, this is how we should behave. Well, that is exactly how we have behaved in recent years concerning our investment strategy in what we’ve described as flight to quality for many months and years so far. But it's also what you can find in our Prime Factory approach regarding our pipeline. So the consistency between our main thoughts and what we have been already doing, not in recent months, but in recent years. Let me cover this more in depth. Let me talk about how CBD allows, for example, better efficiency for the company. I will now skip to Page 9 for a second, and I will go backwards later on. Well, you know that CBD initially means best location possible. Here, as we usually say, the map speaks for itself. Speaks for itself, particularly, if you will compare any map with anyone else map and we believe that if CBD has to many location, this is obvious in our case. If we go a step further on Page 10, it's not only being in the best location that provides automatically better efficiency for the company. It is also that you are providing an asset that basically is nonexisting almost. There is kind of a scarcity play here that remains great when you talk about finding product. So if we mean that for a company to be in the prime needs to be in the best possible place, well, this is obvious for us. But let's go more way deep and let's go back to Page 8 now. For us, to be in the CBD means to provide the best answer to 2 things that the companies are asking for, which is productivity and flexibility. And how we provide for that, not only through location, but also to the approach that we give to our product. And here, we like to detail considering 3 angles. The first is we like low-rise buildings, as you can see at the bottom. We like horizontal boxes. We do not like so much sky scrapers. We believe that more efficiency is provided through low rise. Where are we today after some years of being consistent with this strategy? 80% of our buildings are in the low-rise environment. We also believe that to provide a decent floor size is key for efficiency, it's key for flexibility, it's key for productivity. Where do we stand today? 85% of our footprint is through floors that have more than 1,000 square meters. And finally, we believe that being modular, it's also key to allow for flexibility and therefore, efficiency. How can we prove that we are a modular-oriented company? Well, 82% of our footprint today is devoted to a multi-tenant strategy. So we are quite away from the typical sky scrapers, which is rent to -- for the headquarters of a big company. Our definition of prime positioning is more for horizontal boxes, which are leased to multi-tenant, which also, on top of giving the best product for client, for us, give us the best risk protection is through diversification of our position in a more complicated prime environment. As you can see on Page 11, for example, regarding our total portfolio, 80% of our portfolio have less than 10 floors and 85% of our portfolio has more than 1,000 square meters per floor. If you look at the top 20 assets, the situation is the same, that is Page 11. Interestingly, if you compare this with the outside world, which is at Page 12, you can see that our approach is not the usual one. Of course, it's nothing similar. It's quite decent from what you can find in our peers in U.S.A., in some places of the U.K. market or in some peers of the Spanish market, where the exposure to more vertical asset is much higher than ours. So we believe that our approach to efficiency has to do not only with location, but also with the characteristics of the box, of the building. And also, Page 13, of who is inside the box. We have more than 350 clients with an average of more than 2,000 square meters per client. So our dependence on big clients in there is quite low. And Page 14, finally, on top of all of these approach, we entered a few years ago in the flex world. But as you know, for us, flex means a tool to provide our client with a full toolkit of available alternative that they may desire. And our traditional approach is to mix our fixed kind of offer with our flex kind of offer, which has been provided, as you know, at our company, Utopicus, which has been leading the co-working industry in Spain, in particular. So if you think about how CBD allows for efficiency, well, it has to do with flexibility, it has to do with a specific design of the buildings, it has to do with a certain layout of the floors. I think that we have been insisting this for a number of years, and we are well positioned for the challenges that we may have ahead of us. The second topic has to do with environment. Environment is another request for the future. Is a CBD location a good way to provide an answer to this request? We believe so. This is Page 16 where I am right now. On the left-hand of this page, we emphasize what we know already, which is, well, our building has an extremely low intensity of carbon footprint. Our most recent data is already 8 kilos of CO2 per square meter, which is extremely low compared to any peer. But our message today is, well, is sustainability for our client, it's not only this. It's the wider wall of what does it mean for a client to have their office in a CBD location versus to have it in a secondary location. In this chart, on Page 16, on the right-hand side, you can see a simplistic, but I think quite clear, comparison. Imagine in Madrid, one employee living downtown, one employee being in the north, one employee being in the south -- by the way, in Spain and in France, there's a much higher proportion of people who live downtown, as opposed to other countries, where people live outside and they have to enter into the city every day. This is not our case. For example, right now in the room where all the people that I see here, all of them live downtown. Nobody lives out of town. Here, interesting thing is imagine that you do a calculation on how much is your CO2 exposure. Or how many kilos per square meter are you spending, let me use these words, provided that you live in these 3 places and provided that you go either to a CBD office or either you go to a secondary office. And let's imagine that you may take either public transportation or private transportation. The message remains the same. For an average employee to go to a secondary location means, according to this very illustrative example, much more CO2 emission that to go downtown. Either it doesn't matter if you go in public or private transportation, the calculation remains the same. But obviously, downtown, there's an availability of much more public transportation and therefore, if we have to go more in depth and look at the global footprint from this point of view for a secondary location versus a central location, I think that the comparison would be even more clear. So CBD provides a better answer to an environmental challenge. Besides this, we not are not only aware of this, but we have been working on this direction for certain years already. Page 17 shows the percentage of our buildings that have either LEED or BREEAM certification, almost all of them, and how these have been increasing in recent years. Page 18 shows our recent yields on rating by CDP that is A minus. And as you can see, we are at the top range compared with our peers. Page 19 shows our more -- most recent data about GRESB scores, which have gone as high as 90. 90 is much more than where we were just a few years ago, and it's among the high end of our peers as you can see in Page 20. Page 20, you can see, according to the data from GRESB itself, how Colonial is outperforming on the GRESB benchmark on absolute terms, but also on the average terms, and not only on the absolute level, but also on the momentum, which means the degree of improvement that we are having. On Page 21, you can see our most recent rating by Vigeo, which is also at the high end of the sector. And all this is part of a strategy that is described in Page 22, which starts with our alignment with the Paris Agreement. Our strategy is into decarbonization, including initiatives like the first wood office building in Spain. The leadership I already explained on the efficiency standards in our building. Also, our involvement in green financing and the result of all of this in the most well-known benchmark of ESG. Well, let me summarize this part of this presentation again by saying today, if you want to deliver a really sustainable experience to your client, you'd better be in a prime location than in the middle of nowhere. I think that a little bit of numbers will convince you of this. Finally, the most tricky one and maybe most difficult one to explain, the one that we label as experience. People like to go to the office because they believe that people will be more productive and being more productive means that they will work better and also that they will work happier because if people have a higher level of well-being, they will be more productive. And the company itself will rank at a higher level. Certainly, the future, Page 24, is to be driven by factors such as well-being. And regarding well-being, mobility, which has to play a key role. There are future considerations that will affect take-up as a de-densification, the work-from-home approach, particularly as an option for the employees, the location of the building, the urbanization trend and also some cultural factors. The question here is how do you provide a better, a higher experience for your client? So people prefer to go to the office. People feel better. People are more productive. Well, we can answer to this question from many different angles. For example, in this Page 24, on the right-hand side of the slide, we highlight a recent survey done by SFL. It's a very well-known initiative. It's called the Paris Workplace. This is the seventh edition. And here, they look at the fact of how much happy are people that remain at home. To what extent an employee can come to this situation where he feels lonely or isolated? Well, the result of this recent study done among several thousand of employees is telling you if you play -- if you basically work at the office and you only use working from home as an option, well, you may have this kind of, let's say, negative feelings in a small proportion of the situations, 13%, for example, for the people that work from home 1 week -- one time per week, 1 day per week. But if you always work from home, the lack of well-being will probably impact 60% of your employees. So to be at the office is better than to remain at home from the point of view of well-being and probably from the point of view of productivity, therefore. But it's not only this. I'm now going to the next page. Commuting matters a lot. Look at the center of this page. People believe that they will remain less than 5 years in the office -- sorry, more than 4 years in the office. That happens more, just the less it takes for you to go to your job. If it takes less than 20 minutes, it's 48% that feel that will remain in the same job they have today for more than 5 years. If people take 60 minutes or more, this percentage goes down to 37%. People who commute are particularly sensitive to this topic. And also, they are ready to, let's say, in a way, trade with it. And this happens, particularly with young people. Young people feel that 60% of them would accept 5% less salary if they could be at 20 minutes or less from their destination from their job. This is, therefore, commuting matters and particularly for the talent that you have to care more these days, which is the young people. People feel that their commuting is nasty where they -- when they spend so much time, 75 of people who spend more than 60 minutes find their experience not funny. So the question is obvious. How can you reduce commuting? And what location has to do with this, as we will see now commuting at least in our markets becomes better and better, the more you are in a well-located environment. It's not about commuting. It's also about innovation and creativity. People love to go to the office to have a more lively experience and the more lively it is, the more productive they are. It's not in this slide, but if you look at the whole research, you'll find out that people find a lot of value in the surroundings of the office, where you are, particularly young people. If you go out of the office, and there's nothing you can do, people are not so happy. If there's a lot you can do, then people are much, much happier. So location matters for commuting. The kind of location that CBD provides matters for innovation, matters for activity. Also, this now Page 26, a trend towards de-densification. After some years of densification becoming higher, it looks like a tipping point is now taking place, and this is reversing. And this can be something that could apply particularly to markets where we are, like Madrid, Barcelona and Paris. Page 27 allows for a little bit of numbers on what I just mentioned before about the fact that CBD means less commuting, which means more happiness, which means better experience. We took here the very simplistic example that we used when we are talking about environment to transform this into commuting for our 3 average employees that live in 3 different places in Madrid and can go either to a CBD office or to a secondary office and can do it either by public transportation or by private transportation. The more you use public transportation, the more obvious that secondary may mean 50% more commuting than prime. So that's what we believe. And that's why our strategy of CBD location is a little bit more profound than just talking about where we want our buildings to be. And it's not so much backwards-looking, but also think about the future. And we already benefit from this approach. How do we benefit from this approach? Page 28. 60% of our clients have remained for us for more than 10 years. 76% of our clients have remained with us for more than 5 years. You have -- you provide this kind of product, you have loyalty from your clients, which means, in financial terms, long-term cash flow. Even if the maturity of the contracts is apparently shorter, they simply remain with you more because you are the place to be for those clients. So who are the clients that come with you? Page 29, the best kind of clients. 41% of our clients are rated corporates, 35% are multinationals. If you look at our clients, there is a very important presence of internationally diversified client. So you can look at the names and you can be as diversified as you want to be. So in the end, again, by providing the best, you have the best, which is risk protection for your company. And if you have the best, then you can expect a better performance in terms of rents, as you can see in Page 30, where we simply have remind anyone of the price potential reversion that still today our assets have. So in other terms, it pays off to have this kind of position. Well, this is our strategic positioning, explained a little bit more in detail, not in a simplistic way. And the final pages of this presentation is to show that it's not that we have discovered this last week. We have been playing this game for several years and in different fields. For example, if we talk about our investment strategy, you all know very well. You know that we have been playing this flight to quality strategy that we show on Page 32 for several years. So far, the vast majority of our acquisitions have been opportunities in prime. The vast majority of the disposals that we've gone through have to do with noncore products, secondary offices, mature offices, which, by the way, we have been able also to sell at a premium to a CBD. Page 33. Just to remind you that this year is not a different one. This year is basically a year we also -- we have been mainly selling assets that are noncore or secondary for us. And as I said, we are going on track. We just announced, for example, last week, the sale of the last part of our logistics portfolio, which took place last week. This strategy is not only related to investment strategy. It's also related to our value-creation strategy through our pipeline, what is well-known, our Prime Factory approach, where it also has paid off in the past. Page 35 shows how, in the last 5 years we've gone from an NAV of EUR 4.5 to EUR 12, including dividends in terms of NAV, which is a spectacular growth in absolute terms and in relative terms compared to anyone. In Page 36, these are numbers that we've already shown in the past. Typically, we provide a reminder that a very relevant part of our capital value creation has to do with our Prime Factory kind of approach. So building new prime, it's what has been helping us to an amazing creation of NAV. And it's not only the NAV. Even considering the pandemic scenario we have gone through, if you look at a 5-year performance framework for [ the Colonial ] system, you can see that we have been outperforming the indices clearly, or also, if you go in the detail of comparing us with any one of our peers, our performance has been much higher. And that's why we remain in this kind of strategic positioning for the future, as you can see in Page 38, where we describe our project pipeline and how this pipeline can lead us from EUR 350 million of gross rental income to EUR 436 million. And doing this, Page 39, we can first, stabilize our portfolio and after that, accelerate its growth. Basically, well, I don't know if I went too quickly or too slowly because, here it is -- as I said at the beginning, it was very, very tricky today, but it was important. Our strategic positioning, we believe it allows us to navigate through the current market with the best tools and obtain the best results. And this is why we believe in this provisioning that allows to provide the best answer in terms of efficiency, experience and environment. Just to finish, I close my presentation, again referring to the initial guidance I made after this digression on the strategic positioning. We believe the profit and loss is going to end at EUR 338 million. The earnings per share is going to be around EUR 0.26. And we see this as a result of where the markets are and what we have been doing. We have been mainly selling assets recently. Because we are managing the cycle in the sort of traditional view in order to reload our growth for much happier scenarios after next year, a little bit in line with what we have seen in the initial presentation of Cushman & Wakefield. We are -- we rely not only on this continued approach. We rely also on acceleration on our ESG and our KPIs so they got the best performance. I already mentioned recent news. And as I said at the beginning, capital recycling is growing consistently with what we have been disclosing in the past. Well, this was the presentation we wanted to share with you today. As I said, it's a little bit more distant from numbers and our daily performance, but we believe it's important to provide you with the comfort that we have a consistent view on how to provide the best return for shareholders in the long term. Thank you very much. This is the end of my presentation. And now if there's anyone left, maybe we'll have time for a few questions, if there's anyone. Thank you.

[Operator Instructions] The first question comes from Alvaro Soriano from Bank of America.

Yes, there are some people left. So from my side, 3 quick questions. The first one on the EPS guidance, the EUR 0.26 you've guided for the full year. It implies EUR 0.04 in Q4. It seems a bit low versus Q3 you made EUR 0.06. And Q2, you made EUR 0.09 of EPS. Can you walk through the P&L? It's going to be any one-off on the financing or tax bill we should take into account? That would be the first one. Then the second one also on the EPS growth from 2022 onwards. You seem to be pretty confident in pointing out double-digit growth. I guess most of it is going to be your pipeline, the deliveries of your different projects. But in terms of like-for-like rental growth, do you have any number in mind? And then the last one on disposals. You guide EUR 300 million short term. Correct me if I'm wrong, but most of the disposals, if not all, are in Paris. Is there any specific reason for that? Is Spain closed in terms of investment market? Or you want to concentrate all the divestments in France? That would be all.

Thank you. Alvaro. I start with some part of the upfront and then Carlos or Carmina may step in. Well, first of all, the EPS has to show at some point the fact that we are -- have been selling assets. So the fact that this is becoming more and more relevant for me is reason number one. Reason number two, being effects of the COVID that is having an impact on the second half. But I think that it's mainly related to this very understandable part of the -- of what's going on with us. Talking about the future, well, we believe in recovery, but certainly, this part of the question is much more difficult for us. What we see today is that we have gone through a profound recession this year and having this happened, the forecast for next year and for the rest in terms of GDPs, it's not negative. It's positive. So sort of it's not the new kind of cycle. It's the most common approach that all of us may have for describing the future. And on top of that, we always remind that our current situation compared, for example, to the previous cycle, has a number of interesting factors. The balance between supply and demand. If you remain a couple of years without anyone producing supply, the balance will become even better. And as I mentioned in previous presentations, the leverage situation of the sector is much more -- more deeper. So regarding our immediate EPS and also the future performance of our rents, this would be my comment. As you very correctly pointed out, also our future growth is also dependent in the simple delivery of our projects. So if we deliver the pipeline, we'll be there. And maybe this can be seen as not strictly like-for-like, but in theory, the number of shares will be the same. So it will be more earnings for the same shares only through the delivery of our projects. This would be my immediate comment. I don't know if Carmina or Carlos would add something. But if not, that would be our answer. Alvaro, thanks for your question.

The next question comes from Florent Laroche-Joubert from ODDO BHF.

So I would have 2 questions, if I may. So first question, so you said that your future growth will depend on your capacity to deliver your pipeline. And so my question would be how confident are you to let the building of your pipeline that is not -- that are not pre-let for the moment? So that would be my first question. My second question is, we can see that we are in a very challenged context. And despite you have your -- the best products in CBDs. So can we ask in which cities you are the most comfortable in this context between Paris, Madrid or Barcelona?

Look, it's -- the answer to your second question, I start it with this. I would say is as follows. First of all, we've always said we like the combination of both because Paris is more value-oriented and Madrid or Barcelona are more growth-oriented. If you miss any of the 2, you're missing an important part of our equity story for the mid or for the long term. If you ask me in the very, very short term, maybe now we prefer Paris more than Madrid because this kind of scenarios, historically, it's proven to be more [ vision ] but that would not be my strategy as a company to just sit on 1 of the 2 cities. I would always like to be in the Spanish side too because if not, I will miss some important growth profile just because Spain as the U.K., for example, are markets with higher flexibility when the market recovers. Regarding the pipeline, maybe my colleagues can go more in depth. As you know, we have already been projecting an important part of our assets without any deviation in terms of either on cost or in terms of -- or maybe regarding the next ones, I would say that on the Spanish ones, which are smaller, [ Plaza Europa ] and Velázquez, they're still at very, let's say, early stages, but already with interesting conversations with the clients. Velázquez 88 is going to be a killer, but the place is going to be in Madrid, the kind of a building it's going to be, I have no particular concern on the reletting of this building. And as I say, we already are having conversations on this one. Regarding the smaller one, Plaza Europa in Barcelona, there are also very promising conversations, as we speak. And then I have to say that, yes, there are 2 big ones, which are Biome or Méndez Álvaro, which are -- it's not the time still to go to the market. So we cannot provide -- if you have to be honest, with any evidence of people which are interested in this simply because we cannot -- we have not even started with our marketing activities. But the fundamentals of this sector remain the same in the case of Méndez Álvaro, for example, in Spain. We just saw a colleague, a competitor entering just a couple of weeks ago in exactly the same kind of [ industry ] just 2 years ago, after certain competition for a land plot which is next to ours. So I think that in a way this comes to the interest of the market and the main assumptions what we did in doing this. So everything beyond Méndez Álvaro, we believe that next half -- first half of next year, maybe where we can start to show a little bit of guidance on the developing because that's when we can -- we are expecting to have our initial marketing activities. I will say that you have to remain confident about the main characteristics of these assets.

The next question comes from Celine Huynh from Barclays.

I was just wondering if you could clarify something for me. You know when you guide to a double-digit EPS growth from 2022? Do you have any assumption around like-for-like value declines maybe for next year and more disposals into that guidance?

Honestly, I don't know if I understood everything because the communication lines were not perfect. But I will answer something that maybe is what you asked regarding guidance on our divestment strategies. And by the way, there was a previous question, I think that it was Alvaro who mentioned that, that maybe I was not so specific. The way we see ourselves is that we have to go to, let's say, a net selling strategy in 2020 in the same way that, that was our strategy in 2019 and even in the half of 2018, but we don't see this happening in sizable terms, let's say, a year from now. When we look at what we own and we have and what we would like to have, we believe that this trend towards divestment, it has a good framework with the kind of sizing that we've been guiding the market. We mentioned this pending 300. And now remember that Alvaro was saying if we were to have some additional sales in Spain. Well, we don't rule them out, provided that they are not significant. In other words, this -- we are expecting to dispose of certain assets in both Spain and France. But beyond the number that we provided, nothing that could be material. And in fact, we are not working in anything, nothing that will be relevant as we speak right now. And it looks to me that you also ask something about year 2022 onwards. Again, I would like to be as humble as I can. We -- it's very difficult to forecast what will happen to the market next year. So it's even more difficult 2022 on. But if you look at the broad data that you have in terms of GDP estimates, employment estimates, other kind of -- looks like a sort of V-shaped or U-shaped cycle would not be something that would come as a surprise to us. The characteristics of the current cycle are very well known. It's a very specific external factor that is on its way to change next year. And therefore, our view tries to be as consistent as it can be to this situation.

And maybe just to add...

Can I just ask you because I understand what you're saying, but I also understand it's a balance sheet exercise to me, juggling between EPS growth and maintaining your LTV. And I found it a bit bizarre to get to an EPS growth without knowing what will happen to your balance sheet.

I mean to -- sorry, can you repeat the last part of the sentence because I could not understand? Could you? Sorry.

I find it bizarre to guide to EPS growth for 2022 without knowing what will happen to your balance sheet.

Yes, but we did not guide anyone towards 2022. We -- our guidance is specifically for 2020. And here, we are guiding on specific numbers. Talking about the future, we just described how do we see the general outlook, but we do not -- as you can see in our presentation, we do not provide any guidance whatsoever regarding any KPI.

The next question comes from Marie Dormeuil from Green Street.

I just have one question on my side, which more relates to the markets that you are in. On the -- what is the tone of the conversation you're having with your tenants, either the ones that you are renewing or in conversation to renew the lease? Do you start to see potentially tenants looking for smaller space? Or maybe on your projects that will be delivered in the next couple of years in the CBD, do you start to see tenants looking for maybe a smaller space than what they currently occupy? Or is it similar kind of print of the space they have at the moment?

There are several things that can be said now regarding your question. First of all, dynamics that are strictly related to COVID to -- as we said in previous presentations. We opened a file to discuss with those clients that have been severely impact by the pandemic, particularly in the first wave. And we basically closed that file with maybe a couple of files left. As of today, we can confirm that this file of discussions with clients affected by the first wave have gone through this without any deviation to our previous estimates that we provided on this. Regarding the most -- the more recent, let's say, let's call it, second wave that our markets have gone through, we have not had any significant, any relevant case of a client coming to us with any kind of extraordinary discussion. Just this morning, we are having an executive committee here at Colonial and we're reviewing what's our situation regarding this. And I can confirm that, let's say, COVID-related, we don't have anything else as we speak, that we are -- that may happen to us based on the experience we are going through right now. If we talk about, let's say, our more ordinary kind of clients, I think that the common driver for all of them is to be a little bit more prudent. And if they would ask to something, it's for additional flexibility because the average client first of all has to deal with a pandemia and what this may mean in terms of protection for their employees. Then once this is done, they need a little bit more of visibility. And everybody, as I mentioned in the previous question, will share a certain view of recovery for the future, but without any specific solid grounds for that. So people have to wait a little bit to be more specific on how to behave. And finally, the way they see organization and the best practices, at least for the future, I would say, as an average, most clients are not -- cannot be specific -- are not and cannot be specific as of today. The only thing they would highlight is that they would appreciate any sort of flexibility coming from the landlords. And we have been providing some of them with additional flexibility instead of a break option this year. We have agreed break options at a later stage. I would say this is the most common situation that we've been going through. I don't know if I'm answering your question. Carmina, do you want to add anything else?

It's only to add that, as you mentioned, with the 41% of clients we have been discussing during the COVID, nobody asked for reduction of the space, only one client, which was in a very secondary area in -- let's say, in a call center activity and outsourcing services. So the kind of profile that we have of the client, in the CBD, as Pere mentioned, nobody, and it was 41% of the conversations, nobody asked for a lower space. Only this, which, I would say, this is not a kind of profile of business, which, at the end, asked for a lower -- a lower space in the building.

Yes, it's clear. And speaking, maybe just on -- maybe more of a post-COVID, so post even vaccine world, so once everybody will be more kind of back to normal and business will be just as normal. Things have changed in the office space, and I mean no one is going to deny it. So I was just wondering if maybe that relates more to your pipeline and conversations you might be having more on future letting is just the people you're talking to, if they're considering taking a big amount of space, but maybe this potentially could represent 20% less than the current space they occupied somewhere. And it's just -- of course, I mean, no one has the answer, it's just maybe to get your thoughts on what's going to be the prospect? Or if you're having this kind of conversation on maybe one of pipeline?

Yes. Again, the communication was not good. I don't know if I got it 100%, but let me say a couple of things and then maybe my colleagues can add something else. Well, first of all, we are not having relevant conversations that may change in a relevant way, the way our clients are exposed to our assets. I imagine that mid '21, when there is visibility on the -- let's say, on the health front, this may allow our clients to have more visibility on what they want. But this -- we are not yet in this kind of environment. And what is clear today is that clients are seeking out different things that are important for them. One is, let's say, the remote work. But when they do so, there are different approaches. And the most common approach is this as part of their ESG strategy, as part of how they enhance the well-being of their employees. And by doing so, what they are seeking of is of an optionality for the employee to work remotely part of the week, but not changing in a disruptive way, the way company is organized. Then there's the other megatrend, which is about density, which is a main concern for many people. And as I said, people cannot be specific. If we had to give some thoughts on the work-from-home topic, first of all, I would say, a very, let's say, rough statement to start with. Whatever we may think today, any of us, including myself, maybe it's not so, let's say, relevant because we are now going through, let's say, a very emotional part of the story with a very low visibility. And at the beginning of a new world, and that's -- it's very difficult to have visibility on what we may do in the future because what we think about remote working can change in one way or another dramatically in a few months. But so far, I think that we can already point out a number of evidences that are out there when you look at this phenomenon of work from home. You can see that work from home is not, let's say, a trend that is general and simplistic for any market. You can see that this is a phenomenon that changes depending on the cities, that changes depending on the locations. You can see that also its impact depends on cultural and legal frameworks that are different for countries. And finally, any impact they may have on take-up, then you have to compare it with existing unexpected supply to see the specific impact that this may have for your business. As we stand today with the part that we stand today, we see the impact for our markets and for our products quite more limited that some figures may point out, but probably it is for a more relaxed discussion. But going to the first part of your question, as we speak, there is no evidence of initiatives happening among our clients that may have an impact for us in the near future.

The next question comes from Alban Lhonneur from BMO.

Can you hear me?

Yes. Thank you.

Just a very specific question because it's been a long call, and I'm just trying to get a clear answer on that. Just wonder -- I'm quite curious how you can give a '22 EPS guidance without a '21. That's the first question. And the second one. Also, you highlighted, I think, if I understood correctly, your previous answers on the big uncertainty. And isn't it the case that the EPS in 2022 will also be largely driven by the level of pre-lets on your developments?

Well, maybe I start with again, on guidance because we would not like to be misunderstood because we have been always very prudent on guidance. As you know, the only figure that we give today in the page -- initial page and the Page 42 of our guidance is related to 2020. And we refer to this EUR 0.26 on the EPS. Maybe I'm trying to think where the confusion may come from is we are on Page 39, we give for illustrative purposes, what happens to our rental income if we would add on the rent of our projects, the way they are expected today. You know that when we describe our pipeline, we provide some yield on cost estimates, which are [ current to us ]. Based on that you define how many euros of rents we can expect from this. And if we add this, we may go through this calculation as the basics of what you see in this Page 39. But this is only for the illustrative, let's say, as illustrative goal, to show where our rent level can be simply by the delivery. It's not a guidance of where we expect our P&L to be in the year 2022. And please let me clarify this, if there's been any misunderstanding regarding this. It was for illustrative purposes of what does it mean the pipeline within the framework of our business. But we would like to be clear that our guidance is quite limited in scope. It goes as far as describing the EPS that we expect for the end of this year. I'm sorry, this is being misunderstood the way we expressed ourselves about the future.

The next question comes from Fernando Abril from Alantra Equities.

Just only one question for me. It's related to 2020 guidance again. Sorry about this because you have already answered this question. But I just didn't really understand of why such this rental and EPS decline for Q4 versus Q3. And then related to this, if you please elaborate a little bit more on the impact from the second wave. Where and why is it coming -- where is it come from? And why is it? Because you have already renegotiated all the contracts with your clients. So any clarification would be much appreciated.

Basically, one thing that you have to keep clear in mind that basically, the main impact of the disposals will be basically in the Q4 because in Q4 is where really the assets that have been disposed of through the year are not anymore in our accounts. Specifically, for instance, the secondary offices were sold at the end of September. We had the last leg of the logistics. So in the last quarter, there is a bigger impact of the disposals. And on top then, a prudent approach of what could be an estimate for the second wave. Also, we have now -- we have now had some context, some conversations, but we have no specific figure as of today. This is basically what we are saying in this presentation.

Okay. It looks like there are no more questions. So basically, I would like to thank you all for your kind attention and patience after this long presentation. As always, we remain available for any further clarification on everything we shared with you today. So thank you, and we hope to see you soon again as soon as possible. Thank you, and have a good day.