CPI Property Group (O5G) Earnings Call Transcript & Summary

Good morning, and welcome to CPI Property Group's webcast covering our financial results for the first half of 2024. This is David Greenbaum, CEO of CPI Property Group. I'm speaking to you today at Quadrio, one of our most beautiful properties, combining office and retail in the center of Prague. Joining me today are colleagues who should be familiar to you because our team has been consistent for many years. So let me introduce Pavel Mechura, Group Finance Director; Tomas Salajka, Director of Acquisitions, Asset Management and Sales; Martin Matula, General Counsel; Mindee Lee, Director of Corporate Strategy; Petra Hajna, Group Sustainability Officer; Petra Mizera, Head of External Reporting; and Moritz Mayer, Manager of Capital Markets and Investor Relations. As usual, we are conducting this call as a webcast. [Operator Instructions] I believe we have about 90 minutes, if needed. The presentation material for today's webcast is CPIPG's H1 2024 management report, which is available on our website. The management report is shown on the webcast, but we know some of you are using an old school phone dial-in. So if you're having any technical issues or problems finding the presentation, please send Moritz an email and we will try to resolve your problem. I'd like to begin by thanking bondholders and banks for all the suggestions, constructive criticism, analysis and advice we have received in recent months. We want to hear from you. We actively seek engagement with you. We listen to feedback and we try to act on your suggestions as much as possible. Our general observation is that European real estate sentiment is improving, property prices appear to be stabilizing or recovering, leasing volume has increased, transaction activity is gradually coming back, financing costs have dropped because of lower interest rates and credit spreads in the bond market have tightened. For CPIPG, the operational picture is stable with some bright spots and some tougher spots. Central and Eastern Europe continues to have much healthier property market dynamics than Western Europe and the U.S.A. and our region's economies are performing better. Before we review the group's operational performance in more detail, I thought it would be useful to address three topics, which we are always asked about at our regular fixed income investor meeting. First is governance and our short seller, second is access to cash and simplifying our corporate structure. Third is funding and liquidity. So I'll begin governance and our short seller. Governance has been a focus of company for many years because of our family ownership. The group has made many changes since I joined in 2018, such as increasing the number of Independent Board members, enhancing our policies and procedures and welcoming Apollo as a third-party shareholder seat on the Board. We have created a culture of openness, transparency and detailed disclosure. Because the real estate industry was under pressure, our sector became a popular hunting ground for short sellers. Beginning in November this year, CPIPG became the new obsession of one of these nasty creatures who published about us 5 or 6 times. We responded to the reports in detail and hired White & Case to conduct an independent investigation. The scope of the investigation was vast, covering 2.3 million records, a terabyte of data and many rounds of interviews with management. We were open, transparent and cooperative during all stages of the forensic exercise. As we announced last Friday, the investigation concluded that there was no evidence to support the short seller's claims of wrongdoing, insufficient disclosure, inaccurate reporting or inappropriate behavior. White & Case also made suggestions about how CPIPG can improve. All the recommendations have been accepted and are being implemented. The recommendations fall into three categories, first, creating more formal separation between our shareholders' family office and the company. Going forward dividing line will be clearer with formal agreements in place about how the group will interact with our shareholder. Second, hiring a compliance officer and strengthening our systems. Our goal is to hire a candidate internally or externally by year-end. Our KYC, AML and compliance procedures were already in place and frankly, no material problems with our approach were identified, but I agree we can do more. Our policies were reviewed by Dentons in 2019 and by White & Case this year. As someone who worked in a large bank for many years, I have fond memories of my daily compliance training, and I know we can do an even better job of more constantly delivering policies and procedures to our more than 3,000 employees. A key aspect of our new approach will be automation of onboarding AML and KYC procedures through technology investments, such as our SAP system. Finally, White & Case recommended that CPIPG sell a small number of assets that are a better fit for the family office. The total value of these assets -- maximum EUR 30 million to EUR 40 million or about 0.2% of the group's property portfolio, which we see as immaterial. These sales should occur in the coming quarters, and we will keep you updated. So that's about it on governance. We spent millions because of our short seller, not to mention a lot of management time and stress. We do not expect to give their grievances much more airtime. However, we also took some positive things away from the experience. The second topic is the simplification of our corporate structure. Let me remind you how things got so complicated. In 2021 and 2022, CPIPG acquired IMMOFINANZ and S IMMO. Both companies owned excellent assets in the CEE region, plus assets in Germany, Croatia, Austria and other places that were high quality, but less core to CPIPG and therefore, attractive for our disposal pipeline. We acquired control of both companies. Today, CPIPG owns 75% of IMMOFINANZ and 38% of S IMMO, while IMMOFINANZ owns 51% of S IMMO. In both cases, we exceeded the 75% thresholds for extraordinary resolutions. When we began the acquisition, bond markets and real estate markets were in a different place. Our plan was to issue hybrid bonds and sell larger assets or portfolios to fund the purchase, which would have reduced the group's leverage and preserved our BBB rating. Of course, in early 2022, everything changed. Interest rates spiked, the hybrid bond were closed and the unsecured bond markets closed and remain closed for nearly 2 years. Because of our strong relationships and because of the clear rationale behind the transaction, banks committed EUR 3.75 billion in bridge financings to fund the purchase. In total, CPIPG drew EUR 2.7 billion under these bridge financings. From May -- from 2022 until May 2024, we our focus on repaying the bridge through disposals and bank financing. Because large portfolio sales weren't possible anymore, we focused on a granular pipeline of smaller-sized assets, and we're very successful in getting those disposals done. However, a large portion of those disposals and French bank financing -- fresh bank financing, excuse me, was at IMMOFINANZ and S IMMO, which left a pool of cash to be invested. CPIPG sold both companies, good assets, which improved and complemented their portfolio. For instance, we sold IMMOFINANZ our City Market Retail Parks, a perfect marriage with their Stop Shop Retail Park network. We sold S IMMO office buildings in Prague, which enhanced the quality of their Czech portfolio and increase the level of income. All the intercompany sales went through an extensive arm's-length Board and valuation process. The bottom line is that cash received from intercompany sales was one of the key sources we used to repay CPIPG's bridge financing, which was fully repaid in May. Of course, there's another side to the story. Despite the success of repaying the bridge in a very tough environment, because we sold IMMOFINANZ and S IMMO good quality yielding assets, we have created a situation where significant income is generated at the subsidiary level. Fortunately, we see the situation as short to medium term sustainable because CPIPG has solid liquidity and limited short-term debt maturities, but the overall setup, I would admit is less than perfect. So what's the solution? Let's start with short to medium-term actions to simplify the group. In May, IMMOFINANZ announced the squeeze out of S IMMO. This would make S IMMO a private company, thus increasing flexibility. 2 days ago, IMMOFINANZ announced that the squeeze-out price based on a valuation conducted by PwC was EUR 22.05 per share, meaning that the total cost of the squeeze out should be about EUR 106 million. That would be a cash -- that would be cash out the door for IMMOFINANZ. The squeeze out should be completed by year-end. Yesterday, CPIPG offered our shares in S IMMO to IMMOFINANZ, which would make IMMOFINANZ the 100% owner of S IMMO. If accepted at a price again up to EUR 22.05 per share, the total cost to IMMOFINANZ would be around EUR 600 million. CPIPG is expected to offer the possibility of long-term financing to IMMOFINANZ for a portion of the purchase price as well as a potential discount. As you can see, this sale is quite large, and it will improve liquidity at CPIPG in the short to medium term. However, it's not a permanent solution. This is what we are working on next. Mergers, combinations and other creative strategies around business synergies involve tax, legal, regulatory and other structuring considerations, which we need to weigh carefully before acting. In general, our goal is to minimize the use of cash in any strategy while driving towards a destination where assets, cash, income and debt are in the same place without restrictions. We are working on it seriously because we believe it will help our credit ratings and our funding costs in the future. Please stay tuned on this topic, and we'll continue to update you in the months ahead. The third topic you all ask about is funding and liquidity. We reported EUR 1.7 billion of liquidity at H1 2024, of which about EUR 1.2 billion was cash and the rest was undrawn revolving credit facilities. Where is the cash located? Well, highlighting the issue I mentioned earlier, it's about EUR 370 million at CPIPG, EUR 450 million at IMMOFINANZ and EUR 350 million at S IMMO. Over the next 2 years, we have EUR 2 billion of debt maturing, about half of which is secured bank loans. The largest maturities are in 2026. In fact, the next 18 months are very light. We are quite confident about rolling over secured bank loans because we've been successful working with banks despite a very tough market over the last 2 years. I think foreign investors really underestimate the depth of liquidity in the local bank market in the CEE region. I would also add that our current liquidity before assuming any future sales is more than enough cover all maturities for the next 18 months and unsecured bond market -- bond maturities for the next full 2 years. However, we're not resting comfortably with this position, and we're doing everything we can to continue improving liquidity while repaying debt. Disposals remain the most important source of liquidity. We already closed EUR 980 million of disposal date and reduced gross debt by about EUR 800 million. Our disposal pipeline is large, continues to crank along every day, and we hope to close another EUR 300 million to EUR 400 million of disposals in the coming months. Plus, we're pursuing new deals every day and the improving tone is helping, too. CPIPG has also raised equity. We sold a EUR 250 million minority stake in part of our Polish business to Sona Asset Management in June. We are super excited to have Sona as a partner. They have deep pockets, are very capable and support what we are doing. It's nice to have some friends. We also went back to the bond markets in May issuing EUR 500 million at a coupon of 7%. The bond issue was a success, 6x oversubscribed, and I believe our investors have done very well holding our bonds. Short sellers maybe have done less well. We will continue to look at the bond markets in the future, although we need to keep a close eye on our ICR. We can talk about the rating agencies later, but I will just quote one of our major bondholders who said: Forget ratings, focus on liquidity. Now we're not ready to forget ratings entirely okay, because we want to be BBB rated again, but now is the time to focus on fundamentals. So don't be surprised to see us prioritize repaying debt in advance and extending wherever we can. Well, that was a super long introduction. I hope it was helpful. Now we can get into the heart of the presentation. So on Page 4, you can see key financial highlights. The group's property portfolio was EUR 18.6 billion at 30 June with contracted gross rents of EUR 939 million. LTV at the end of H1 was 50%, down from 52% at the end of Q1. Despite completing more than EUR 900 million of disposals in H1, we managed to continue growing EBITDA and net business income. FFOs declined a little, mostly because of higher financing costs. Occupancy slipped a little now at 91.3% Group-wide, but we do not see any fundamental problems and have clear plans to address some of the gaps. The bottom line is we are focused, but not concerned. Moving on to Page 5. We think diversification makes CPI unique. 46% of our portfolio is in offices. The group owns 170 office properties, primarily in Central and Eastern European capital cities of Berlin, Prague, Warsaw, Budapest, Bucharest and Vienna with few a exceptions, our office portfolio is focused on these core locations. Because of our acquisitions of IMMOFINANZ and S IMMO, the group acquired offices in other cities, Dusseldorf, which are high on the list for sale, and Zagreb, where we have sold all of the group assets this year. Retail is our second largest segment. CPIPG focuses primarily on retail parks in the CEE region, along with shopping centers in the Czech Republic and other CEE countries. CPIPG owns 160 retail parks, which are nearly 100% occupied and have been extremely popular with both tenants and shoppers. Retail parks is one segment where we will do some selective development, for instance, in Croatia where the returns have been excellent and our teams I have been doing a super job of building the network. We own hotels in the CEE region, where the group has a long history as an owner/operator. This year we sold a 50% stake in a joint venture owning several hotels and our hotel operating business to Best Hotels, which is a well-regarded investor from Slovakia. CPIPG also owns residential properties in the Czech Republic, which we consider core and residential property in Germany and the U.K. that we consider less core and are targeted for sale. I won't dwell on the geographical split, but I should mention that there's been a lot of focus and negativity around Germany. We believe our core market of Berlin, and the assets that we own are well positioned now and in the future. Berlin is the destination for 40% of technology investments in Germany and is the most international city in Germany. So we are very happy to be invested in Berlin. However, in the end, Germany represents only "15%" of the Group's net business income. And within that 15%, there are assets, I mentioned Dusseldorf, but also S IMMO owns many residential and small office assets for sale. There are many assets in that 15% that are really going to be disposed. So that 15% should be smaller over time. The bulk of our income comes from Central Eastern European countries where I believe the situation is stronger, both from an economic perspective but also in terms of real estate markets. Moving on to Page 7. There are some important things to say or maybe to say again. Reducing leverage remains a priority. CPIPG has been criticized and downgraded for the speed of deleveraging, but we are still getting it done despite the weaker environment for valuations. We intend to continue reducing leverage and to restore our BBB rating. I would note our progress not just on the net LTV, but also on net debt to EBITDA. ICR will be a tougher metric for us, but we hope investors and rating agencies can see the bigger picture. The portfolio continues to show growth in like-for-like rents, as I mentioned earlier, reflecting both indexations and the strengths of our markets. Valuations have held up well. We reported a decline of EUR 156 million at H1 or about 0.80% on the entire portfolio. About half the portfolio was revalued for H1, mostly because IMMOFINANZ and S IMMO have the practice of doing it 2 times per year. CPIPG will revalue our portfolio for the full year, and we expect a neutral but mixed picture. Retail valuations are solid. We see some of our competitors even showing higher values. Hotels are doing great, too. Office is stable in CEE, but it's fair to expect some weakness in Germany. Nothing that would change our trajectory of reducing leverage, but we felt it was important to guide you. On Page 8, you can see that our property portfolio gradually shrinking as we make sales and adjust the valuation. On the other hand, we continue to invest in our portfolio to enhance value. Occupancy declined to 91.3% for the group at H1. The largest contributor was Berlin, which Tomas will touch on soon. In residential, the drop in occupancy was mostly due to the Czech Republic, where we have vacated units for refurbishment in order to push for higher rents. Looking forward, we see positives and negatives. Our views in Poland and Romania are optimistic that office occupancy will rise through year-end, given the state of the market and lease negotiations. Berlin might continue to be affected by the softer economy. Retail occupancy has been solid. We attribute the slight decline in retail occupancy into specific units that were vacated and should be released. On Page 9, there's more information about the group's financing and liquidity coverage with new bonds and loans in H1 and we paid about EUR 1.4 billion of loans, bonds and bridge debt. Because of the group's large liquidity of EUR 1.7 billion and small short-term debt maturities, we have 2.6x coverage of all debt maturities for the next 18 months. Between the 18-months and 2-year mark, we have bonds and loan maturities, which means the coverage is less. But frankly, this measure is conservative because the group has been very successful in rolling over bank loans. So if you look at our unsecured bonds, then we have 1.6x coverage for the next 2 years. Finally, a word on CPIPG's disposal pipeline on Page 10. The current pipeline is EUR 2 billion, and the reality are just beginning the fresh pipeline, having completed the last one, which was also EUR 2 billion and was completed ahead of schedule. Up to this point, our disposals have averaged around book value. You can see here on the slide, photos of things that we sold, which tell you something about our flexibility and diversity. We sold our ski resort in Montana to Vail. We sold an office development in Romania, residential assets in Austria, an office property in Warsaw, the Grand Center office in Zagreb, mostly to local investors, local capital. And that, I think, is really a hallmark of CPIPG and what we are able to do. The future pipeline is centered around residential assets, mostly German assets in S IMMO plus U.K. assets in CPIPG. We might consider disposing a portion of the Czech residential assets because the demand has been so strong and also some land. The group is gradually selling the assets that we acquired in Dubai and is exploring other sales in Italy and Austria. Hotels will remain at [indiscernible]. We love the segment, but there are some hotels managed under international brands such as Marriott, which might be a better fit for another investor and are great to sell because of excellent performance and high quality. In summary, we have lots to do and continuing to deliver on this pipeline is critical for CPIPG. Plus, I will mention the disposal pipeline is the primary responsibility of Mr. Tomas Salajka, who is speaking next, so I will hand it over to Tomas. Tomas?

Thank you, David. Yes, the disposal pipeline is an important thing for me every day, but now I will focus on our operations and assets. Let me begin on Page 14. Most of you have seen this several times, but just a reminder that the Group is well diversified in terms of assets and tenants. Our top 10 most valuable assets represent only 12.7% of the total portfolio value, and our largest tenant, efficient retailer LPP Group is only 1.1% of rental income, but spreads across many units in our portfolio. In fact, you will see that most of our top tenants are in retail. Our exposure to large office tenant is really quite limited, at least when you look on a Group-wide basis. Lease maturities are spread over the next few years as typical lease length is 5 years in the CEE region. On Page 15, I will begin discussing the office sector in more detail. The group owns more than 3 million square meters of office space focused on capital cities of the CEE region. Our portfolio in each city is quite different, but we heavily favor multi-tenant properties, and we benefit greatly from the quality and experience of our local teams who manage the assets on a day-to-day basis. We also benefit from the fact that the office stock in CEE is mostly newly built during the last 20 years, and the new construction offices in Prague, Warsaw, Paris and Vienna is limited and the fact that the market vacancy in cities like Berlin, Prague and Vienna is in the low to mid-single digits. Focusing on occupancy, which I believe you will want to hear about, overall office occupancy dropped by 0.9% from 88.7% at the end of the year to 87.8% at H1 2024. There are many factors driving this, but the bottom line is the impact is partially because of the weaker macroeconomic picture in Germany and partly specific to each City. We will discuss as we go through each city. The great news is, as you can see on Page 16, office income continues to rise even despite disposals, and this is because of like-for-like rental growth of 4.6%. On Page 17, I focus on Berlin. The asset picture is a great example of the Red brick properties in excellent locations, which make up our portfolio in Berlin. There are several things which make our portfolio unique. First, these Red brick properties appeal to a very broad range of potential tenants. We can see a significant share of IT, about 22%, which has been both the growth driver in Berlin for the past 2 years and the weakest in the past 3 quarters. The group also has a significant exposure to professional services, such as accountants, architects, lawyers. The group also has a healthy share of manufacturing, mostly specialized precision manufacturing who are not subject to the same working from home trends in office. For instance, a company like Hallberg, which makes specialized communications equipment for aviation has been a tenant in our portfolio for a long time, or the Technical University of Berlin, which is a large tenant on a long lease. In total, we have more than 1,700 tenants across 41 properties in Berlin, shows that the unit sizes are pretty small, and we have lots of diversity with our exposure to [indiscernible] tenant. Moving on to Page 18. I think one of the most interesting features of our Berlin portfolio is the rents. The EBIT trend in our portfolio is EUR 11.71 per square meter, which is well below the estimated trend to value of our portfolio in Berlin of EUR 15.2 per square meter. This is because of the historical under-rented nature of the properties where we see a gradual change from artisans and small craftsmen paying low rents to new businesses and where our investments in quality are gradually bringing results. Rents are rising quarter-after-quarter, which we believe reflect the quality and affordability of the space. Rental income increased in H1 2024 relative to H1 2023, which is quite impressive considering the operating environment. In Warsaw, Page 20, we have a portfolio of EUR 1.6 billion, and we are the top owner of offices in Warsaw. As you can see in the photo, the assets are quite different from what we have in Berlin. They tend to be newer, more modern and green. However, like Berlin, this is an actively managed multi-tenant portfolio. Earlier this year, as David mentioned, Sona Asset Management invested EUR 250 million of equity into a portion of this portfolio, which we see as a great vote of confidence for what we are doing. Occupancy is 93%, above the market average of 89%. Our team expects occupancy to increase between now and year-end, mostly in part to the releasing of a large space that was vacated by Google and in one of our best and prominent assets, Warsaw Financial Center. We have split the Google space into smaller units. In some cases, we had done some basic fit-outs to attract tenants and reduce lead time. And as a result, we are seeing good trip successful leasing of these units. In fact, leasing of small units of around 1,000 square meters has been a great thing for CPIPG this year. I would also point out that we are starting to see more Ukrainian companies starting to take longer office leases, and more companies are investing in Warsaw, which they see as a potential launch pad for rebuilding and investing in Ukraine in the coming years. Another important factor in Warsaw, as we outlined on Page 21, is the fact that the new supply is very modest, which is running at about 1/3 of the volume from previous 2 years. As a result of strong demand and less construction, overall market vacancy declined. Moving on to Prague, Page 23. We had a portfolio of about EUR 900 million and are regarded as one of the market leaders with a long operating history. In Prague, we have a combination of historic assets and newer, more modern properties. The properties shown on this page, Bubenská, was built in 1935, was completely refurbished by us a few years ago and is now headquarters of WPP. Overall, Prague is a small market with very limited new construction. Like-for-like rents grew 3.9%. Home office is not a major factor in Prague. In general, we see that tenants want to stay in their existing units because the availability of attractive competing spaces is limited. Lastly, a significant portion of our vacancy in Prague relates to Tokovo office, where we are preparing the refurbishment following the departure of major tenant. So we hope to see occupancy improving going forward. I will touch briefly on the remaining cities now, saving some time for retail and residential hotels and many other topics that you want to hear about. On Page 26, Vienna. This is a less core location for the Group but is actually performing really well. There is almost no new construction of offices in Vienna and vacancy is at 3.5%, which is an all-time low. We have been successful in selling office assets, most notably the Vienna Court Tower for more than EUR 150 million this year. Public sector tenants are a large part of the portfolio, which is a great thing in Austria because these tenants tend to be very sticky. On Page 27 Budapest this is one of our tougher markets. We have a great local team but recently new government regulations, of course, government-owned and related companies to move from privately owned office billings into government-owned buildings. This is creating some challenges for us and the entire market, along with the new supply, which is higher than we are seeing in other CEE cities. Our leading teams have been very creative. For instance, bundling together services from our hotels and retail with office, things like conference rooms, food and beverage. I would also note that in Hungary, our team is doing a super job with the conversion to 100% green energy. On Page 28, Bucharest is a city where there is almost no new construction because the local government is very antidevelopment. We see the potential for occupancy and income to continue increasing because we have good and well-located assets. Demand for Bucharest offices is also strong on the investment side with IMMOFINANZ having sold a development asset to AFI just a few weeks ago. Our team being very creative, for instance, one success has been leasing more spaces to private hospital and medical practices. Hospitals tend to have long increase -- long leases of 20-plus years in large spaces and fit-outs, which are not mainly as expensive as other types of tenants considering the amortization over the long lease. So we like the market in Bucharest and we see a good future ahead. Moving on to Page 29, retail. The retail sector has consistently been a bright spot for CPIPG. We have been -- we have a portfolio of about EUR 5 billion, mostly retail parks and regional shopping centers. Our retail parks are spread across the CEE region. while our shopping centers are primarily in the Czech Republic, along with some very good properties in Poland and Romania. Occupancy is very high at 96.5%. Created fears about retail during the pandemic were overblown. We have seen shoppers come back in force. Footfall is down since the pandemic, but basket sizes are up. As the largest owner of retail space in the region, CPIPG is one of the first calls for new tenants looking to enter the market or expand their footprint. Now with inflation coming down, we are starting to see a real wage growth in our region, which should only be helpful for performance. Speaking about our shopping centers in Czech Republic on Page 30. I would point out that our shopping centers are literally full. What is vacant is typically 1 or 2 units in a center, which are under refurbishment, under lease negotiation or there is a tenant in place with a lease that hasn't started yet. Supply of new shopping centers is very low in the Czech Republic, and we are definitely -- we definitely see new tenants entering the market, such as [ Muller ] Bulgaria, some new grocery chains. In the retail parks on Page 33, these properties remain the star performers in our portfolio. The occupancy is nearly 100%, and frankly, we see many new tenants who would have historically preferred to be in a closed shopping center. We see them preferring the open-air format for retail park. Here, in retail parks, our network effect is very powerful because we have 160 properties across the region. As David mentioned earlier, we are selectively developing new retail parks in Croatia, where the demand is extremely high. My last comment will be on residential. Looking at Page 37. You can see the majority of our residential assets are in the Czech Republic where CPIPG is the second largest residential landlord, mostly in the regions outside of Prague. We also own assets in Germany and the U.K., which we have mostly targeted for sale. Looking at Page 38, because of the strong residential market in the Czech Republic, we have seen income rising even as occupancy has declined slightly. This is very easy -- fairly easy to explain because we have been vacating units for refurbishment and re-leasing at higher rents. So we see the slight decline in occupancy as temporary. Now let me turn the floor over to Mindee to discuss hotels. Mindee?

Thank you, Tomas. Moving on to the hotel portfolio on Page 40. One segment that has without a doubt, seen positive development is the hospitality sector. Operational performance has continued improving because of the sustained recovery in travel demand after the pandemic. CEE capital cities recorded significant growth, outpacing the overall European region. Prague, in particular, reported almost 15% growth in revenues per available room in the first half of 2024, driven partly by the country hosting the Ice Hockey World Championship.

Sorry, who won the Ice Hockey Championship?

Czech Republic.

Okay, sorry Mindee. Please continue.

Average daily rate of our portfolio grew 16% year-on-year, and occupancy is closing in on the gap for pre-pandemic levels. The outlook is promising, as we see an increase in corporate travel and events-led businesses and also returning Asian tourists to this region. Given the outperformance of the segment, we are witnessing increased investor interest in hospitality assets. Earlier this year, as David mentioned, we completed two large disposals namely a 50% bid sale in a JV owning hotels in the Czech Republic and our ski resort in Crans, Montana. We continue to progress on several divestments of hotel properties, which has so far received a lot of interest. To sum it up, CPIPG remains a leading hotel owner and operator in the CEE region, which will continue to be a core segment for us that also provides some diversification. Moving on to Page 43. I will briefly comment on complementary assets, including landbank. We view land as a long-term strategic investment. We bought land at very good prices, either long ago or through workout of nonperforming loans, and we are in no rush to develop. On the other hand, some developments such as retail park in Croatia and residential in the Czech Republic have been great success stories. When we get a good offer on land, we are happy to sell, and this just happens about every year. However, we are also happy to hold land forever, which we see as part of the long-term vision as a family of companies. Now let me turn the floor back to David. David?

Thank you, Mindee. I just want to spend one more minute on capital structure and financing, more or less to summarize what I said earlier. We're making progress on leverage, we want to restore the ratings, our debt maturities in the coming 2 years are very manageable, and we're focused on being proactive and leaving nothing to the last minute. More specifically, Moritz, would you like to spend a moment on rating?

Sure. Thank you, David. And let me first briefly remind you happened over the last 6 to 12 months on the rating. In December 2023, S&P put our BBB- ratings on a negative outlook and downgraded us about 5 months later to our current rating BB+ with a negative outlook. Moody's had our BAA3 rating on a negative outlook since July 2023 and downgraded us 12 months later to BA1 with a negative outlook. So when analyzing the negative outlook for both rating agencies, many of you are probably wondering how yesterday's announcement of the S IMMO squeeze-out price and the potential sale of our S IMMO share -- IMMOFINANZ will impact the rating. While we haven't yet spoken with the rating agencies, in our view, this shouldn't change anything given the squeeze-out was announced in May ahead of the S&P downgrade and well ahead of the Moody's downgrade, with S&P also mentioning the squeeze-out as one of the downgrade reasons due to the cash outflow, which we think is overall limited and a significant step forward in terms of reducing the Group's complexity. Also given that Moody's looks at gross leverage, this doesn't impact their leverage calculation. Coupled with the potential sale of our S IMMO shares to IMMOFINANZ, this will also create significant intra-group liquidity, which we understand is important, both agencies and our bond investors. Another key objective for rating agencies is leverage. We made good progress on disposals and reducing gross debt by EUR 800 million, with more disposals already signed and in advanced stages compared to last year when our leverage reduction was an uphill battle against declining valuations, the stabilization and stabilizing valuation environment should help us move on a clearer deleveraging trajectory. Hence, with S&P, we continue to stay within the rating guidance and start building again headroom. For Moody's, we're working on it, while the starting point is a bit less favorable due to their reclassification of hybrid to 100% that is part of their downgrade to high yield. Given that the rating agencies forecast incorporate valuation declines in the mid-single digits, we are somewhat optimistic that valuations will hold up better at the year-end. Finally, we remain highly focused on maintaining liquidities to support ratings and proactively address our debt maturities. Going forward, we will have to walk the fine line between proactive refinancing and maintaining a balanced profile between unsecured and secured funding while keeping the cost of debt in mind. So now, let me hand over to Petra to discuss ESG. Petra?

Thank you, Moritz. Please let me walk you through the ESG highlights. Starting on Page 71, during the first half of 2024, the group focused on our double materiality assessment, climate risk assessment, including priority allocation mapping and the climate transition action plan. We also encountered challenges related to sustainability accompanied by the new directive and nonfinancial reporting requirements. The double materiality assessment has been conducted on the consolidated level for the whole Group applying at [ adopt ] and grow. As the first mandatory step, the Group's value chain was defined as you can see on Page 71. Subsequently the impacts and risks associated with the particle sustainability metrics were identified and assessed. The outcome was approved by the ESG Committee and the Board of Directors in August 2024. Currently, the stakeholder engagement is ongoing. Therefore, we really much value your feedback on this assessment. In addition to our goal to increase the share of green building, we are pleased to report 41.4% of our property portfolio, all certified green as of end of June 2024, an increase of 0.8% from year-end 2023 and an increase of 3.9% from first half 2023. Several new photovoltaic installations have been implemented across the group, including locations in Germany, the Czech Republic, Hungary, Slovenia and Serbia. We also appreciated an opportunity to speak at various conferences and workshops in the region to share our ESG knowledge expertise journey during the first half of 2024. Moving on to Page 73. CPIPG successfully returned on the bond market with a EUR 500 million green bond issued in May 2024. So far, the group has issued five green bonds, one Sustainability-linked bond and one Sustainability-linked loan. In January 2022, the Group introduced sustainability finance framework, combining both sustainability-link and green bond framework. The framework is available on our website. The Green Bond Impact Report is part of the half year management report starting on Page 74. At end June 2024, 100% of net proceeds from issued green bonds were allocated to eligible assets, mostly to certified green buildings, 87%, followed by equity investments representing 6% and sustainable farming with a test certificate accounting for 4%. The environmental impact of the green bond portfolio for green buildings represents annual greenhouse gases reduction of 12,685 tonnes of CO2 equivalent for year 2023. Renewable energy projects, photovoltaic plants represented annual greenhouse gas reduction of 1,242 tonnes of CO2 equivalent last year. According to the green bond framework, CPIPG is committed to refining its reporting by an independent third party. Sustainability has reviewed the Green Bond Impact report as part of the annual review process performed in August 2024. You can find the annual review later on our website as well. So this covers the ESG section, and I believe now we are ready to go to Q&A section. David, do you want to take over from here?

So thank you, Petra. I'm happy to take over. I will say, it's actually, for CPI, a fairly small number of questions, maybe that means we're talking to all of you too frequently, or you're bored listening from us. Moritz, would you like to kind of guide us through the various pieces of Q&A and choose who you want to answer. Go ahead.

Okay. Sure. And so the first question is, there seems to have been a rise in vacancy across not just offices, but also residential and logistics. Can you maybe elaborate on the reasons then where you see occupancy for the full year in each segment on market? Tomas?

Thank you. I mean, in respect to [indiscernible] so much logistics. I will focus on residential, and I think I mentioned it on the call that we intentionally, let's say, create some vacancy to improve the units to actually lease it for much more and much higher rent. So this is, I would say, temporary situation, which also brings positive effect on the income. At the same time, there are some specific situations in the office segments where, for example, as I also mentioned, Google, a big tenant left in Warsaw Center. We are re-leasing it. The Warsaw team is confident they will lease, if not everything, but majority till the end of this year. Similar situation with one asset in the Czech Republic, after all there, a big part of the building is vacated. Now we are preparing it for a new tenant, which is government-related in the Czech Republic, and we should sign the lease until the end of September or October and refer build the asset for them as well to some extent. So this should be handled by us, and I -- the teams expect those results in the end of this year, all I can say.

Thank you, Tomas. And the next question, do we have a plan for the hybrids? And will we manage the hybrid? David?

The answer to that question is a combination of no and yes and maybe. The reality is we care about our hybrid bondholders. If you look at our history, hybrids have been enormously helpful in funding the growth of the company. As a family-owned company, hybrid has been a very important source of equity. When we're an investment-grade company, again, who want to be issuing hybrids again and therefore, we have to treat our hybrid bondholders well, and we have to think of solutions that makes sense. What I'd say is -- and by the way, as you know, we're very well covered by the banks. We have a very clear idea of what others have been doing. And so we have a good idea of what the options are. But frankly, some of our banks have been showing us some very creative things. We're only looking at things that I would say are mutually beneficial for us on the hybrid bonds. Now I would also say that we have some time from my perspective. And therefore, we're thinking, we're planning, we're seeing how about the unsecured bonds perform as well. So I think that also has helped with hybrid. So I would just say, I don't have an answer for you yet. We're looking at it very frequently. And I think, hopefully, the market knows that we tend to be proactive around the way that we deal with our bonds.

And the next question, can you give an indication how much of a loan you will give IMMOFINANZ as part of their acquisition of your S IMMO stake? Is this sale related to merger plans of CPI and IMMOFINANZ? When do you think such a merger could be done by? And any idea, and how it can be structured and how we can think it could impact liquidity?

So this is -- this question was asked by an investor -- or an analyst actually who knows us really, really well. Here's what I would say. The aggregate price is about EUR 600 million. And we are ready to accommodate the cash and liquidity needs of IMMOFINANZ. So we're going to go step by step. We need to negotiate it. In terms of longer-term outcomes, so I talked about short-term things that we are doing, let's call it short to medium term. We think this sale of shares creates a very nice relationship and it allow us to get, hopefully, cash to the CPIPG level in the future. In terms of steps that go beyond that, maybe something like a merger in either direction with either entity. As a surviving entity, we really have not looked at this kind of thing yet. We are really looking at all potential options to simplify and frankly, nothing that was mentioned in our July announcement should be excluded. Everything is on the table. We're reviewing everything. As I mentioned, there's an enormous number of tax, legal, regulatory, accounting and other consequences, financial that we need to go through. So that's really how I would answer that question for now.

Thank you, David. The next question. Last quarter, you said you were close to executing around EUR 267 million of new bank debt. Can you give an update on this? And so maybe I tackle the question. So we have several of those new loans that are advanced, and we expect both in Q3 and Q4 signed most of them, so they're progressing as expected. And with our Q3 results at the end November, we'll probably have more updates on the signing and closing of some of the loans.

And I would just add, we get this question a lot. The unfortunate downgrade by Moody's and S&P has not had an impact -- a material impact on our ability to get secured financing from banks because simply that is driven by the quality of the assets, and we have high-quality assets in locations which have a scarcity of high-quality assets.

Thank you, David. And the next question, can you tell us how size by value of signed disposals that have yet to close? So I guess it's about the size.

Do you think it's EUR 300 million?

EUR 300 million to EUR 400 million.

It includes [indiscernible], but also a lot of assets in Germany, which are not shared deals but asset deals and need to be registered. So it's the condition for closing. So it's a technical closing. And it's actually being closed every week, some of them. So actually, it's gradual, but I think the total amount is around EUR 350 million plus/minus.

Thank you, Tomas. And the next question, any further updates, initial plans on how CPIPG will integrate IMMOFINANZ? Any timeline in mind for this?

I would say, I think we've covered this already. I do want to emphasize again that we are focused on solutions that do not involve spending cash, right? Right now, when we have cash, clearly, the priority is to repay debt. We need to balance lots of interest. But really, at the end of the day, we want to not spend cash as much as possible. And I think we have a lot of options on the table to provide better integration, better synergies, better access to cash and a better future for the whole Group.

Thank you. And the next question, please may you provide some more details on the structure of the transaction with Sona Asset Management? S&P wrote that we view the shares acquired by funds managed by Sona Assets Management as a key to that. Has -- I guess, what are these features? I also note that there was a EUR 88 million difference between the value of the portfolio sold to Sona versus the EUR 250 million that was paid. What accounts for this large difference? So maybe I will start with...

Well, I'll say one thing and then maybe you can say. I know you have a few points -- two points to make here. We have spent so much time and effort looking at ways of raising equity in the last couple of years. When you think about potential long-term solutions to the group, we have easier equity also in mind, right? We really need to think about that in the future because clearly, the last couple of years have demonstrated how difficult it is for a family-owned company to access equity whenever we want, despite our great relationship with Apollo and what we've done with them in the past. So as we search for really good quality equity investments, it became clear that a variety of reasons, investors wanted to invest in sub-portfolios of the Group, which are kind of like major packages that could maybe have a different future. What I mean is when you have a portfolio of assets and you invest minority equity, you end up owning part of something that could stand on its own, right? So the Polish portfolio that we sold to Sona, our team in Poland, I think is easily regarded as the best. And frankly, we have a great portfolio and platform of assets in Warsaw that theoretically is a company that could raise equity on its own and live on its own. Again, this how these minority investors sometimes think about it. So at the end of the day, when you have a minority investor coming into a portfolio of assets that are not highly liquid as real estate is, it's natural that these minority investors will expect some protections, right? They will expect some protection, they'll expect an ability to exit or monetize or do something, which I think is completely understandable to anyone who is a professional investor. And we really worked hard and we have very good knowledge of how the rating agencies treated other deals and we are absolutely sure that the protection that we offer to our minority investors really are natural and normal for equity transactions. The rating agency methodology, they're mostly, I think, focused around our motivation to exercise our call option. And I think they found some of the rights as a bit too motivating on the call option. We disagree but, at the end of the day, we chose to go forward with the Polish deal because frankly, we really wanted to build that relationship with Sona. We think they're a great partner. And also, we like the reconfirmation of our Polish assets is the due diligence that was done on that transaction was extremely expensive. And then I think, hopefully, for all of you to have another professional investor from the U.K. come and look in Poland and really verify what we are doing, I think, is -- that's really the rationale behind we did the deal. And we wanted to demonstrate to all of you to our investors, when we say we're going to do things we do and we follow through. We were not super happy with the rating agency treatment, but they're entitled to their opinion. Now Moritz I hope I didn't say everything you wanted to say. Go ahead.

And I think you covered most of it. I would just reiterate, the returns are based on operating performance. It's really up to how the assets will perform, what Sona and we will receive as operational returns. And to the last part of the question, basically, we sold the portfolio to book value, which re -- which is pretty much a representation of the equity-like transaction. And if you look in the equity markets, what we see in peers trading, they generally all trade or most of them trade to 20% or even a higher discount to book value. And so I think this is really the reflection of what you see there in the account. And the next question, thank you for the call. Two questions, please. What can give us comfort that you will not deviate again on the government side, EG intra-group transactions, given that this is not a regulatory or rating requirement? And second, do you have a call date in 2025 for the hybrid debt ahead of your 2026 senior bonds? How do you plan to manage the situation? Do you plan to keep the cash for the 2026 senior bonds?

So on the first part of the question around what you call deviation on the governance side, EG intra-group transaction, I'll kind of answer this in two ways. But the first is the intra-group transaction, we don't see as any deviation on the government side. We explained very clearly why we did them, why it was a good thing to do, why was it is beneficial to IMMOFINANZ and S IMMO, was it was beneficial to CPI, and ultimately, the need for such transactions will be eliminated as we simplify the structure of the group. And again, we went through a very difficult period the last couple of years. And I think those transactions worked really quite well. In terms of what gives you comfort that we're not going to deviate in other respects on the government side, again, I think we just went through an absolute complete forensic investigation by White & Case, which demonstrated that yes, while we can improve I think if any of you opened your books and e-mails to somebody to look through they would find something you can improve. While we can improve, it's clear we were already doing a lot of things properly as well. But what is your comfort is that, frankly, we are not eager to repeat the experience with short sellers. We don't want to do things with short sellers. We're going to have lots of questions about -- and frankly, we lived through a very unpleasant experience. We want to take the company forward, and we believe we will in a positive way. And then the second part, I think I kind of answered this around the hybrids. We're looking at the hybrids. I'm sure that all of you would agree. Considering the situation, the downgrades, everything, we need to focus primarily on corporate finance. The happiness of our bondholders is also extremely important. But first, we should focus fundamentally like that large investor told us, on the corporate finance. So I would say we're probably spending more time thinking about the senior unsecured bonds than we are about the hybrids at this moment in time. But rest assured, we are thinking about what the best thing is to do, and we'll continue to update you.

Thank you, David. And next question. We have two asset sales programs, which together are worth over EUR 4 billion. I know the first was completed earlier this year in terms of deal signed. How far along is CPI in terms of deals closed for the first and second? So how far long are we in terms of deals signed for the second EUR 2 billion program? I think when I tried to answer it, when looking at it, always a bit we understand the confusion is given that our programs were started in August and September, our covering periods over the financial years. And basically, year-to-date, we're around about EUR 500 million in signings into the new EUR 2 billion disposal pipeline. And the rest then have been basically completed. It's also fair to say that still Hvar an outstanding item that was part of the first disposal pipeline. And so pretty much, if you think about where we stand, it's in line with our 12 to 24 months for the new disposal pipeline. And the next question, how much is still outstanding on the RCF pro forma for after quarter end refinancing?

I guess I think they just want to know where it is now.

Yes. The current outstanding balance is EUR 250 million.

And look, we're looking at it -- RCF matures in 2026. We're already in discussions with our banks. Again, we're fortunate to have a lot of very supportive banks.

And the next question. Do you think the landbank is a segment which maybe would be more suited to the Vitek's family office or to CPI Group?

Look, I would say the landbank that we have, it's very high-quality. We're not spending money to develop it actively, and the things that we do choose to develop as a group are absolutely within our core competency. And this has been a hallmark of the group for 30 years or so. So frankly, no. At the end of the day, we're in the real estate business, and we think the landbank that we have is extremely high quality. I would never rule out just about anything, right? And the investor who asked us has been following us a long time, which I never rule anything out. And we really love to look at different options for how to optimize and improve the company. But I think Tomas, do you agree with what I have just said?

Of course, I agree with David, in principle, we have this land for some reason at [indiscernible]. For example, is a most prominent landbank in Prague, which at some point will be our future to grow. And actually, it would be really not my decision to actually sell it at this moment, at that kind of discounted price. So of course, there may be different situations. We are -- actually, we have different plans with the landbank, but I think it's an integral part of the group, and we are working with it actively. So that's all I can say.

Thank you, Tomas. And the next question, I can see from the earnings report, loans provided to third parties increased by roughly EUR 93 million. Can you please detail what this is related to? Who's the third party and the reason for this loan. So basically, as part, if you may remember, as part of our hotel JV with 50% with BHP. Since we sell it and now enjoy control, we deconsolidated the hotel JV basically so part of loans provided are to BHP and the hotel joint venture and, hence, this balance increased. I think the next question on hybrids, we already covered. So I would jump that. The next one, can you provide guidance for the level of dividends and share buybacks to be paid in 2024? Would you consider cutting dividends, buyback to prioritize liquidity deleveraging?

The answer is we have cut our distributions for the last 2 years, and I think you should absolutely expect a significant cut in our distributions this year relative to the past. So this is a decision that CPIPG tends to make in late November or December. We really want to see how the whole year has gone. We want to make sure that we're balancing our stakeholder interest. But of course, we understand the importance of being very thoughtful around distributions. We need to maintain a state of deleveraging. That is absolutely a priority.

Thank you, David. You mentioned challenges to the ICR. How do you see your average cost of debt evolving? Or what is your target maximum cost of debt for the short to medium term?

That's an interesting one. Our current cost of debt is just slightly above 3%, and we have quite high-yielding portfolio. Now you can do lots of back-of-envelope math that will lead you in a lot of different directions. But the reality is the math in real estate means either our financing costs will have to come down or our leverage will have to come down. It's going to be a mix of the two. Wouldn't you say? And I would say the answer on how do I see our cost of financing going forward to me is very -- I mean, I think from a base interest rate perspective, I think we're in a better place than we were some months ago. I think when it comes to a credit spread perspective, it appears we're in a better place than -- secured loan spreads are basically the same, but the unsecured bond spreads have improved pretty materially. And hopefully, we will do the right things that cause our spreads to tighten even further, and that will help our financing costs in the future. But you have something you wanted to say, Moritz?

Yes, I would just add basically virtually all our debt is either fixed or is fully hedged. So with 93%. So on the existing debt, we have wide visibility that there is no risk of -- from rate changes. And then as David said, really the magnitude of the repayment and obviously, at refinancing, the base rate plus margin will somewhat lift up the cost of business. The next question, I think, on hybrids, we already covered. And the next one, could you please elaborate on disposals, maybe giving an idea of order of magnitude of the various pockets and order of priority in terms to use of proceeds now that the RCF is almost completely repaid? Tomas, do you want to tackle this question?

I think we are giving constant information about our disposal update. You can see that it's continuing well. You can -- we actually expect to finalize approximately EUR 300 million to EUR 400 million this year. As mentioned before, next year, we have a lot of plans as well. So I actually see that people fulfill what we promised, which is the additional EUR 2 billion plan in time as we envisaged before. It's in principle what I can say.

And use of proceeds, I would say, as we make disposals, I'd say, yes, we've repaid a very large amount of the RCF. I would say the RCF is a good source of repayment, but so too are the bonds, and we're going to look at those. That's all what I can say. Again, access to bond markets for us, we were in the darkest days of the last 2 years and we're preparing selves to live without it. But certainly, we are much, much happier if we can access the bond markets. So therefore, we'll probably try to prioritize that as much as possible.

Okay. And the next question, do you expect any other minority investments from other sponsors, EG as did by Sona? And what about disposals as soon as EUR 2 billion are reached, are you considering a new wave of disposals? Or do you think it will be enough?

So thank you for the question. What I would say is we have some very supportive partners. We have -- as you may all recall our discussions with Apollo, around the potential minority investment in Berlin, and we had some interest in Italy. And I would say we are continuing these discussions with investors. We are discussing these things regularly. I would say that we did a lot of work on these minority equity investments in an effort to save our ratings. And we went to the rating agencies with a very big number, and we said we can execute this. This is ready to go. This is equity and the feedback from the rating agencies, we don't like this enough. So therefore, it ended up -- we just did the Sona deal because it made sense, we wanted to bring them in. Now again, we are working with our partners. We're working in different ways of doing these minority investments. And so I would say I'm not going to rule anything out. But certainly, we really -- we want to support a very positive dialogue with the rating agencies. We want to do things that they think are sensible. And so I would just say stay tuned, we'll continue to look at that. I'm sorry, was there a second part of the question? As soon as the EUR 2 billion is reached, will we look at more? Or will it be enough? And I would just say as [indiscernible] original EUR 2 billion, the EUR 2 billion. I would say, in fact, to a large extent, a lot of the things, not all, but a lot of the things that we are selling are things we would have sold anyway, right? They were part of the original plan before the whole market got crazy. When we went into IMMOFINANZ and S IMMO, so we got very good prices, and we always plan to sell the things that we are selling. Now maybe we sold a few things that are really nice, like [indiscernible] and other things that we do like. But at the end of the day, it's kind of natural to proceed with this pipeline. Whether we need to do more, it's just going to be a function of leverage.

And the market.

And the market. Yes, agree.

And the next question, I have a few questions, please. Regarding the S IMMO sale to IMMOFINANZ and the squeeze-out, can you talk us through the gross and net cash flows at group level and CPI, please? As Moody's now counts hybrids as debt, is it worth considering repurchasing some of these securities? And can you shed more light on possible valuation adjustments by year-end given comments about the proportion of the portfolio revalued in H1 and the many moving parts? A percentage indication would be appreciated.

Do you want to handle this one, Moritz?

Do you want to tackle the first part and I'll take Moody's?

Okay. I mean, effectively, the S IMMO squeeze-out will result in the EUR 106 million cash to be paid by IMMOFINANZ to minority investors. It -- and so that's effectively -- that's what the cash flow would be. Second, the sale of S IMMO shares -- of our S IMMO shares to IMMOFINANZ again, we're estimating EUR 600 million, but we need to negotiate it. It will be a combination of cash up front and a loan, again, to be negotiated, to be approved. But obviously, we wanted to make it clear that this intention is out there.

And maybe I think on a hybrid part, we already tackled about...

The answer is would we consider repurchasing some of the hybrid. We're considering repurchasing just about everything, okay? So I would say give us time. We're looking at everything. I think we are very well advised by banks and let's see how we go.

And I think the last part was on valuation. So I think we covered before that around about half of the portfolio was revalued as part of H1 and on the outlook for the second half. Basically, I mean, it will be -- we haven't revalued it. It will be subject to what the appraiser said. I think David covered earlier that we particularly in German offices, we expect probably a bit more adjustments. And as David also previously mentioned, the mix -- we think the mix or diversification in the portfolio will benefit us as we see retail fairly stable and hotels as well. And I think on distributions, we already covered that. The next questions.

Okay. So my statement earlier that we didn't have that many questions is obviously not [indiscernible]. We're happy to continue.

And the next one, separation with Vitek's family offices carried out and maybe a full merger completed with IMMOFINANZ and S IMMO. Could you commit to minimizing or even trying to avoid altogether any related party transaction?

So there's a lot of leads to take in this question, which I would just say, as it relates to separation of the family office from the company, related party transactions with our shareholder, the goal is to minimize as much as possible. And when we think there's a reason to do something to have -- again, as we believe we did have and improved over a long period of time through forensic investigation, we do have a business rationale, we do have proper procedures in place but we're going to do an extra careful job on all of these things in the future. I would expect relative to the past history to see fewer transactions with our shareholder going forward. Certainly, I would say the concept of our shareholder contributing assets to offset loan, I think we completely say that you won't -- that's not something you should expect to see from us going forward, but I won't rule related party transactions in the future, subject to us handling them properly. So that would be my answer to that one.

Okay. And please, can you give an update on CapEx plans for the next 18 months?

Actually, I can take it. In principle, the CapEx for us is divided in two parts, main parts, one of which is actually recurring CapEx for maintenance and normal care of the assets, which -- when you consider the size of the portfolio, it should be around EUR 150 million to EUR 200 million maximum every year. We cannot deal with it too much because we have to take care of the assets to keep them occupied and attractive for the tenants. And then on top of it, we always have some special projects, which are mostly developments. As of now, we are doing pretty much only some ready development and some development of these retail parks, as I mentioned before, in Croatia. Everything is financed by banks on this development. So actually, we don't need any equity from our side. We are using the bank financing. And the reason is that we already have the land in Croatia. We just have to utilize it. And actually, if you don't utilize it now, there will be a competition coming. So we need to do it quickly. So that's why we are accelerating the development in order to protect us actually from any competition coming to the respective cities. And in respect of residential developments, we are selling the apartments in approximately 2 years. So you invest through bank financing and you get very nice margins, very nice upside, especially in Prague because there is less development in 2 years' time. So it's actually a nice addition to the income without any cash flow needs from our perspective. That's actually how it looks. And of course, you have to differentiate between recurring CapEx and actually development CapEx, which is very specific.

Okay. Thank you, Tomas. I think the next question, we can skip already answered. And then I think we partially answered this, but I will just read it out again. We mentioned the chunk maturity in 2026, will we consider to manage it in advance and how we prioritize the bond and RCF? For the proceeds, we batch from the asset disposals, what would we use this liquidity for? Do you have a guidance for the asset disposals for the second half?

We've covered a lot of this? Or what do you think?

I think refinancing we set on the disposals. And I think guidance for the disposals. I mean, we're year-to-date, EUR 980 million. We said we have closed around EUR 400 million. Already signed one, and maybe we'll add a few more. So -- and I think also the rating agencies gave some guidance in their reports and what they expect.

But also, look, I wasn't joking when I said that the disposal pipeline is the responsibility of Tomas Salajka. And I can tell you Tomas and his team, every day, are trying to sign new disposals, add to the pipeline like this is a daily business for us right now. And so Moritz is articulating what has already been signed, but hopefully, you will expect more progress on client disposals through the end of the year. Wouldn't you expect, Tomas?

Yes. I was mentioning before. And also, as you mentioned, we are trying pretty much to dispose the assets which makes sense to dispose. So it was originally planned to dispose then actually, we are now combining three companies. We are making a much bigger portfolio. We are trying to put together a portfolio altogether, which is somehow logical. So we are selling assets, which we would sell anyway. And I think we are progressing well because we are mostly focused on local money and not interested in showing money. So we are actually [indiscernible] to succeed in a nice speed.

Thank you, Tomas. And so two more questions, and I think then we're also running out of time. Would you like to elaborate more on how banks support like how much new loans was closed? Mindee, do you want to cover that?

We closed about EUR 60 million of fresh new bank loans in the first half. And as mentioned earlier, we are progressing on more new secured financing in the coming months. What I would say as well is that refinancing of our existing secured loans are also advancing well. And here, we really do not anticipate any issues.

Thanks, Mindee. And the final question, can you please repeat the amount of cash at CPIPG, S IMMO and IMMOFINANZ level as of H1 '24? I can answer that. So CPI had round about EUR 370 million, S IMMO, EUR 350 million, at IMMOFINANZ EUR 450 million. So -- and I think last check...

That's it, yes? Hopefully, people are still listening, at least someone is still listening. I would say thank you to all of you for your interest in CPIPG. We hope we have provided you with a good update on the company. But I think all of you know that we are easy to contact. And if you want to speak to us, we are available to you. I imagine we'll see some of you tomorrow. We're going to a conference in London, and we have a very full schedule. So we look forward to seeing all of you, and thank you very much for your time.