Echo Investment S.A. (4I3.F) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome after the summer break. My name is Weronika Ukleja, I'm the company's spoke person, and I'm here with our management with Nicklas Lindberg, our CEO. Hello, Nicklas. And of course, with our CFO, Maciej Drozd. Good morning, Maciej.

Good morning.

So today, we are going to summarize our activity during the first 6 months of 2025 and talk about the upcoming months. We're going to have a Q&A session afterwards. So stick around, but we'll start with the presentation. So Maciej, the floor is yours.

Thank you. I would like to start from the strategy. This is the message we repeat each quarter, but I think it's good to do that to make sure that everybody is on board about where we are going. And of course, it will take some time before we implement this fully, but we are very much on that path, as you will see during the presentation. So in the Commercial sector, we focus mainly on the disposal of the yielding assets, and we already disposed some of them, more detail will come. Of course, we will reinvest in that segment, mainly in also CBD, where we see the biggest potential for new office projects. Living sector is and will be the most important and growing sector that we are active in. First, Resi4Sale with Archicom, but also Resi4Rent, PRS segment and Student houses. That's something that we very much focus on, and I want to explain later what is the impact of the change on our balance sheet and our results. Finance. All of that, of course, will have a very significant impact on our balance sheet, on our results that you will see shortly. By selling the yielding assets, we want to reduce debt more than PLN 500 million just by disposal of the assets with the debt that is encumbering them but also to generate around PLN 800 million of free cash that we can deploy into projects to reduce corporate debt, but also, which is very important to pay dividend. You will see in the course of this -- all of this happening that our balance sheet is changing even this quarter that we have more and more inventory, which is representing residential projects. and that we will have less debt and less investment in the Commercial segment. So let's look one by one about what happened and which projects we already sold. We are starting from City 2, which was sold in Q2, so it's already reflected on the balance sheet. You have a chance to look at. Next one is something that happened after. We signed PSPA. It's a very, very big landmark deal in PRS segment, where we signed agreements to sell 18 projects for the value of around PLN 2.4 billion. Next one is transaction that already closed. It's already finalized. We sold our 30% share in one of the buildings of Towarowa 22 destination project. It's already the beginning, it's the first completed project of that area of this super big 6 hectare project in the city of Warsaw. And the quality of this project and that the quality of what we are building there will be better and better visible already in this presentation, but also in the coming quarters. Here, you can see an overview of what was already accomplished and where we are going to. So again, we already sold City 2 and Towarowa, we are in advanced negotiation to sell Brain Park and Libero. These are projects in regional cities. We also have ongoing discussions about the remaining part of the Brain Park in Krakow. We signed Resi4Rent, and again, by doing all of that, our plan is to reduce project debt by PLN 500 million to generate PLN 800 million of cash and to have this cash available for further investment, debt reduction and dividend. All of that, of course, happens on the investment market, on the broader investment market. And we need to make here a few comments. The market is strong. It also quite visibly the yields that we can achieve as proven by Towarowa 22 disposal are, very good. This is the prime yield for Warsaw. Market in regional cities is characterized by activity of smaller investor , individual investor. So it's slightly different. But we outperformed the market by selling City 2 and by selling other projects, we are clearly the leaders in this market. And of course, you will see that some in the figures. Towarowa 22 is the project that I already mentioned. I would like to highlight also some other parts of the project that were not yet mentioned. So office house which is already sold. So we sold 30% of that, and it's owned by our JV partner. We are starting right now. Next, a very big office project there, 50,000 office tower. We have ongoing residential project, which is implemented by Archicom and will soon start the next phases of residential projects by Archicom. And very soon also we will make beautiful park in the center of this project, which is a 2-hectare area that will be available to all people around, and it will make it look extremely beautiful. And now you need to take a promise for that. But in 1 year, it will be very, very visible. So once again, what were the Q2 highlights. We sold 600 apartments, and I think it's very important, this is -- Nicklas will talk about that more, that we recorded 34% increase year-on-year, which is record breaking, which is the highest year-on-year increase in terms of sales among large developers. We sold one of the residential plots for record high price in Warsaw. We sold City 2 Building and also Archicom declared a payment of dividend that will soon come to our investors. After H1, we are able to organize financing for our student housing platform for one of our office projects in Warszawa. And as I already mentioned, of course, we signed a few landmark sale transactions that prove that the market is strong and that we can outperform it in a big way. When we look at the segments, which we, of course, do each quarter, we can see that living sector, Residential For Sale remains very attractive, but of course, it's also very competitive with large offer. And I think what I should say here that we very clearly outperformed the market in terms of sales growth. And of course, it will soon translate into handovers and into profits. Residential for Rent, that's a very attractive market also as proven by the transaction that we signed presently. We continue to be active on that market. We have a number of ongoing projects in Resi4Rent, we developed this portfolio, and we look for new opportunities on that market. In Student Housing, we are just to open first student projects in Krakow. And we are starting 2 new projects in Warsaw. So our activity is getting more and more intense. Market is very interesting. It's undersupplied. There is not so much competition compared to the size of the demand, to the size of the market, the size of the opportunity. So we see it as the market on which we'll be more and more active in the next 3 to 5 years with the aim to achieve position of the leader with 5,000 beds in that period. In Office segment, we see clearly that the Warsaw CBD is a very, very attractive part of this market. We are looking for new opportunities. At the same time, we continue to develop projects in regional cities, Krakow and Warszawa, that I already mentioned, which are more difficult, but we have very good interest from potential tenants, good leasing activity. So we see that our projects are very well received and will soon be completed, and they will be operating next year. In Retail, we continue to operate our shopping centers. The segment itself is stable. The numbers are strong. But of course, we do not intend to invest into new projects in that area. We intend to dispose of Libero and to further improve performance of our other projects. Construction market is very interesting. It's actually very supportive. We do not see already for a long time price increase. On the contrary, we see that the cost of materials is more attractive. So we continue to have a very supportive environment for our margins because we can build our projects at budgets that we planned or below these budgets. So what are the key financial data for the quarter? I would like to start from saying that the numbers are as expected by the market, as proven by consensus. So there's nothing really surprising to the market. But of course, still some comments should be made. Clearly, the Q2 result reflects the correction of commercial assets prices. As I already mentioned, the number of investors in regional cities is limited. So we are adjusting yields on -- valuation yields on these projects to expected transaction prices. We monitor the market because our goal, our strategy is to dispose of these assets. So this is what we are doing. At the same time, as I mentioned, Warszawa market is very strong and is definitely maintaining a prime yield level. And due to the quality of our assets and very good leasing performance because they are all very well leased, we can continue on our strategy of turning these assets into cash. And our intention is to implement that within next 12 months for sure. So the way we see that is that the price correction that was necessarily creates a base where the profit that is coming, that will come from the increased residential sector activity will be more and more visible in our results. And what do I mean by that exactly? When we look at the handovers that we already had in this year, in first half of the year and that are planned for Q3 and Q4, you can see the bars that are going up very, very highly, which means that this handed over apartments will translate into profit in Q3 and Q4. And of course, we don't have '26 here, but this is the trend that we intend to continue. That slide is something that we look at each quarter. So I don't think I need to go into very much of the detail, but just to remind you that this shows the balance sheet that we have adjusted by the market value of Archicom shares. So Archicom assets in our consolidated balance sheet of Echo are shown at cost. So what we do hear we show what would be our value per share if we adjust value of residential assets reflecting the share market price of Archicom. So it would be PLN 6.5 per share, which we think is a useful information that should be highlighted. And now Nicklas, floor is yours.

Thank you, Maciej. I would like to talk about the living sector and especially about how we have been dealing with it, as Maciej said. It's a growing part of our business. We will continue growing this part of our business. But with that saying we're not going to leave the office market. We're going to continue growing in the office markets because we want to have a diversified business that will be profitable, no matter where the market is. We sold, like Maciej saying, more than 30% more apartments than a year ago in this quarter, which is really showing that we are progressing. We are doing a lot, like Maciej said, with the handovers in Q3, Q4. But also, we are preferring -- we are now preparing ourselves for a very successful 2026. We have a lot of sales happening now that will then be visible in the results of 2026. We continue growing our land bank because we are still on the path that we've shown before, but we would like to continue growing our residential part of our business because we think it's a very, very interesting business to continue growing in. And also in Archicom, we are now focusing on the first-time buyers and creating a product that is more adapted to the first-time buyers, which is a group of buyers that is increasing a lot in the market where we think we can get a bigger market share on that market. What's impressive with this figure that we've grown more than 30%. This is in a market that is stable or slightly decreasing as a market, which shows our product is rightly adapted to the market. We will continue growing, and we will see this trend continues growing in the coming quarters. If we look at that what we have been focusing on here is we diversified over all these markets. We focus -- we diversify both over the market and inside the market. Many of you people who have been in Warsaw, you see that there is a lot more Archicom projects all over the city, and you will continue seeing these trends in all the different cities. One of our impressive product here is Galeria M Park or Modern Mokotów like we call it, which is really where we're creating a destination product, which is the flagship of Echo and the flagship of Archicom and we do this all of Poland, which I think makes us unique compared to the other developers in the market. This slide, I think, is really important. On this slide, we have shown repeatedly quarter after quarter. We are going to get up to 3,000 apartments sold this year. We're going to continue growing our business. You will see it already enough of '26 and forward where we are targeted is to get up to 4,000 apartments. And at that level, we will be on the top players in the Polish market, and then we will continue delivering a very, very sustainable profit going forward. And also like Maciej coming into later on, in the presentation, this will totally change our balance sheet, which is looking very, very different every quarter, and you see it already now, and you will see it even more in the coming quarters. Echo sales is spread across the different parts of our market. So we are focusing on being a dominant player in all our different markets. We have historically in Krakow, we have not been selling as much as we had. We had a lower land bank. We have increased that land bank dramatically. We have started a lot of projects in the last quarter that you will see in the next presentation. So we are continuously working here to have a diversified land bank, diversified projects across the different cities, but also in the different segments within the different cities. Handovers is in, like Maciej said before, this is about how we will recognize the profit. For this year of 2025, a lot of the profit will be recognized in Q3, Q4 which will have a significant impact on the result of the whole group going forward as we're handing off a lot of apartments now in Q3, Q4. Out of the 2,400, I think we're handing over 2,000 in the coming -- 2 last quarters of the year, which is really going to be having a big effect. And this is something we follow up very full in all our different businesses to make sure that we are reaching our target. The offer is strong across our different markets. You see here, we have roughly 3,000 apartments under offer, which is roughly what we are selling, which shows that we have a balanced business that is really adopted, so we continue growing. You will see, as we are increasing our targets, we will have a lot more apartment for sale as well, and we will then, at the same time, increasing our land bank as well. This is something that we are monitoring very closely and we're also looking at how we are selling and sticking to the plans that we had for all the different years. Here you see our market shares over all the different markets and how we are constantly staying at a high market level. Of course, all the different businesses. Katowice, we are doing our first project in and now evaluating if that's the market we should enter or what is that seen as in the market and how we will continue growing. Important thing here is to be big in the main market of Poland, which is Warsaw where we have been growing a lot over the last year because that is always a market where we had a very small presence, and we see we're going to continue growing in Warsaw as that is the market, it is very, very stable, no matter where the market is. As you see on this map, we are missing Tricity, this is something we are constantly analyzing. And for us to be able to enter that market, we need to come up with a strong market presence, and that is something that me and the Board are constantly analyzing what is the right time to enter and what steps should be taken. Resi4Rent is a very interesting business. We did a deal [ PSBA ] now when we sold about 5,500 units. Which is a lot of units. But if you look at it in the overall Polish market, it's a very small part of the amount of apartments that being for rent. We see a dramatic chance of continue growing in this part of this market. We think it's this landmark deal that we've done really proving that the market is in the beginning of development. And if we look into other markets like Sweden, Germany, we are still a very small part of the market, and we would like to continue growing. All our projects are fully leased, and we continue seeing strong leasing across all the projects that we are completing. And also important to highlight here despite the sale, we are handing over a lot of apartments this year. We think we're going to complete another close to 2,000 apartments, and we're starting up another 600 apartments in Warsaw. So we continue growing our business. This is not like we are not focusing on the Resi4Rent market. We got an opportunity. We took that opportunity and now we're going to continue growing our business. The individual unit sales are going very well. We are selling well both on Browary and on Kepa. This was 2 deals that we took a decision to sell as individual unit because it generated more profit than it would be to sell them as a bigger package. This is what we're talking about, how we continue growing. We have 10,500 units in the pipeline. We sold off 5,500. There will be close to 5,000 units still available to be developed. So it's really that is -- it's just like we're doing in all the rest of our business where we see an opportunity to divest, we are divesting, but we continue growing within the same part of our business. Resi4Rent is an integrated part of the whole Echo business and will continue being it going forward. The rental market, like I said before, it's one of the markets where there is the biggest, biggest opportunity of growing. And if we look at this 10,000 apartments compared to the overall market in Poland, it's less than 1% of the market. So for us, we really see the opportunity to grow here. And I think you should analyze the slide that you see in front of us. Just looking at Poland about the amount of how much there is to rent and also for the overcrowded, how many people live per household in the same apartment or per square meter. This is something that is continuous growing in Poland, and that will come. We have a growing middle class coming up in the market -- in the country, and that will make sure that everybody moves into bigger, bigger apartments. People would like to rent your first apartment, and here, we're giving them a unique opportunity to do that in a very effective way and you just need to move in directly into a fully furnished apartment. So if you look at the institutional rental market, which I think is a small part of the total market, and I'd rather look at the full market in Poland, where you see that this is something that is a huge opportunity to grow. This is a market in Poland that will continue growing, and we would like to be the leader in this growth on this market. Here, I said the -- the strategy in PRS is the same as we're having in offices, the same as we have in the rest of the business. We grow up the business. When it's got mature, we divest and then we'll continue growing again. We think that this is all looking at us for opportunities. You will see more things happening in this market in the coming quarters because this is just something that we started with the first transaction. Now we're going to continue developing this and doing more in this segment. It took us a lot of years to build up to be the dominant player, and now we are there, and we're going to continue doing much more transactions going forward to show our presence but also show that this is a very strategic way for the shareholders to make more returns on the investments. Living as students is something that we went into a year ago. And we're already now opening up 1,200 beds, out of them, 600 is ready. We are leasing extremely well here. It's really a market that we see there's a huge interest. You see our projects is well perceived on market. We're opening up 2 projects now in Krakow that you will see the first students moving in, in 2 weeks, and we are really, really excited to see that. And the quality we deliver and the potential we see here is to grow in the same way as we did in the Resi4Rent in the beginning. And we think you're going to see a lot more here. You've seen Warsaw, the first project being started and there will be more projects start in Warsaw. Here, we see the 1,200 beds, I talked about, the 500 is Warsaw, and we're going to continue starting up more projects in Warsaw. The focus on this portfolio is Warsaw and Krakow where we want to continue growing because we see the biggest potential in these 2 markets, and that's why we want to continue growing quickly in these markets. Here you see the fit-out in all different departments and the beautiful layouts of the different buildings. This is something that is really, really an add-on to our business. We have Resi4Rent, we have Resi4Sale and we have Students. And all this thing we call the Living sector. And in the Living Sector, we will analyze further opportunities to grow our business because we think this is really, really interesting. But saying that, it's crucial to say we're going to stay in the Commercial market or Offices because I see a lot of opportunities to continue growing in offices as well. The Polish PBSA or the student housing market is also in the beginning. Here is a lot of potential to continue growing. There's a lot of students in Poland. And Poland is really getting ahead of itself and U.S. Being the growth engine of Europe, and we think this is the right time to continue developing for us here. If you look from an office, we sold off T22, we sold off City 2, we see a very, very strong leasing market across all our different markets. We see rental growth, we see investor interest in our product. So I think going forward, we have decreasing interest rates more, more companies looking to Poland with all the things that are happening here. I think the office market will continue to grow. And it's really interesting for us, point of view here, like Maciej said before, Warsaw CBD. We are starting up the next phase on Towarowa. We're looking at new opportunities to buy more land in CBD Warsaw, which will make us to be one of the few players today that has the muscles and capacity to deliver office project on the Warsaw market, where there is a record low supply. And that is something that we think is really the opportunity with our financial strength to start a lot of new projects. Towarowa will be a beautiful project. And here is really what we do with the tower. We're starting residential towers. We're starting another apartment here. By the end of 2028, early 2029, you will see the whole project being ready and 200,000 square meters of destination project will be opened up. And this will be a record-breaking project for Europe. This is the project of 7 hectares. And I think people will come from all over Europe and the world to look at this fantastic project. Both in Wroclaw and in Warsaw, we are -- in Krakow, we are now delivering our new office projects. They are very, very well perceived by the tenants. We see strong leasing interest. We're going to complete them in Q1, Q2 next year. And upon completion, both these projects will then be fully leased. And that is just showing that in these regional cities, there is a low supply, but still there is a strong demand for the new projects that are really changing the view of the cities. And all these projects are in the areas of destination projects. They are in mixed-use areas. We never do projects in this way that are isolated stand-alone offices. We believe a lot in the destination where you will have a mixed use and ability to both work, live and entertain in the same area. City Space is a business that has been with us for many years now. We are continuing slowly growing the business, but we are making the business more and more profitable year-on-year. We see the interest for city space and the services delivering is increasing across all our markets and in the regional cities. You see the same thing here. We continue focusing on Warsaw and how we can grow our Warsaw presence. Galeria Libero, Maciej talked about before, is now in the area where we stabilized and it's the right time for divesting of it and we opened up TK Maxx of 2,000 square meters, which is really showing that this is a project that the tenants and the market and everybody believes in. So I have a big hopefully better. And going forward, I think it will be a fantastic project for Katowice. Galeria Mlociny, we see the same trend. We continue growing our performance. We continue growing our turnover and our footfall, and we're opening up new brands constantly. So every time you will come to Mlociny, you will see a new brand opening up as we are constantly adapting the offer to the clients, what the clients want in the market. From an ESG perspective, I think what's most important here, we opened up a state-of-the-art school that we delivered now in this quarter. And this is a school that we will contribute into the city of Warsaw based on the law that we implemented on Modern Mokotów where we developed 1,600 apartments. This is really a fantastic school and it also shows the importance of a collaboration between the private sector and the cities, how we can continue doing great things for the inhabitants of that area where we are developing. This school is really, really impressive and take the chance to go by and look at it, it's a really fantastic investment and it really shows how ESG working in practice.

Yes. Now let's look again at our financials a little bit of a deeper dive into the numbers. You already know the bottom line, but I think I would like to draw your attention to what is interesting, what is hiding under the numbers. So clearly, of course, adjusting fair value of assets was very important. But the way we see it, it's an event of 2025 that gives us a platform on which the results coming from Residential segment from Living sector can be well visible and the high profitability of that sector will drive our results both in Q3, Q4 of this year, but also in the future years. So residential handovers were already higher in the first half compared to a year ago in Q2. But we really need to look and expect what is going to happen Q3 and Q4. Our fixed costs were -- did not show a significant variance year-on-year. But I think what is very important is that we have decreasing G&A costs, so administrative cost, general costs and increasing selling costs. The selling activity in marketing, it's very important to establish a brand, to build a brand, to build brand recognition of Archicom, of Archicom collection, et cetera. And this is where we spend the money. So despite of the fact that you see a number, which is almost flat in SG&A, actually behind that, there is a very big increase of marketing and sales activity which is, again, building something for the future. What is also interesting, of course, as I already mentioned that our fair value adjustment was mainly focused on the assets that are in the process of sale. But of course, we look at the cost and the prices and the values of all the assets in the Commercial segment, and we make sure that they reflect the selling value as we see it. Our margin in residential remains strong at around 35%. And I think this is the level that we have an ambition to be close to. It's a very strong margin compared to the market. And with the supporting environment in terms of construction costs and with very good projects, our objective is to keep the margins in the Residential segment strong. So not only to grow the top line, the handovers, but also to make sure that they translate into profit in gross margin and also net profit. If you look at the balance sheet, obviously, what is very, very visible and Nicklas mentioned that as well, the balance sheet is transforming. You see inventory figure much, much higher that reflects growing Residential business. So the fact that we have more projects, projects with higher value. And of course, this trend will continue as we grow projects under construction as we grow our offer, we grow our pipeline and the land bank. What is very, very important is that this growth is financed mainly by residential clients prepayments. So on the back of strong sales activity that we continue to perform and outperform in this year, we can see more and more clients prepayments. So that's very important to remember that this growth is mainly financed by prepayments, not by the debt. And at the same time, you can see less investment properties on the balance sheet because these are assets that are marked for sale, Libero, Brain. So that part will be smaller. But of course, as Nicklas mentioned, we will continue to invest in high-quality office projects, especially in Warsaw CBD. If you look at the other side of the balance sheet, clearly, you can see that there was not much movement in terms of long-term debt or short-term debt quarter-to-quarter short-term debt slightly decreased. But I think what is the most important is that this debt will be reduced by the disposal of the assets and further with the liquidity created by the disposal of the asset free cash that we will use to push our net debt ratio from around 39%, which is 39% is within the range that we see our target range, which is 30% to 40% net debt ratio to assets but you would like to push it down to closer to 30% to have to reflect the fact that we have actually less commercial projects on our balance sheet, so we need less debt, but also to benefit from lower financial costs, because despite of the fact that the interest rates go down, they are still quite high. So we would like to have less debt also for that reason to have better result less -- by having less financial costs. When we look at -- specifically at our corporate bond debt and corporate debt, we see that there's nothing maturing in '25. We have very modest amount maturing in '26. So we will -- we are looking at proactively reducing further maturities partly, of course, this will happen as a reduction of project debt, which is not shown here, but also that which is shown here, which is corporate debt that we will be proactively reducing over time as the liquidity coming from the disposal is coming, again to have lower costs and to have lower net debt-to-asset ratio. And that's it too.

This is already a Q&A session. Thank you very much, Maciej. I think we'll start with Resi4Rent for the Q&A session because our record-breaking transaction is bringing a lot of interest. And we have a couple of questions on this subject. So I will tell you all and maybe Maciej will start and Nicklas will finish because it brings up the money issue and our future plans issue. So after selling part of the Resi4Rent portfolio, will the company continue to make further investments? This is the first question. However, our viewers would like to also know, how much cash do we expect from this transaction?

Yes. So about cash, I think we -- I don't want to be specific, but that was already included in the envelope that was mentioned more than one time here during the presentation, right? So that's already included. But again, we rather avoid being specific on individual transactions.

And from the continued investment into the Resi4Rent, we said already now we're going to complete another 2,000 apartments this year. We have another 600 that we are starting up. We believe a lot in the business, and we will continue growing in that business as it is a crucial part of the whole strategy of our company.

So Maciej, you mentioned that we would not want to get into specific details about money. However, there is another question about that, but office house this time. So our deal with AFI and our 30% of shares. So basically, the office house is valued at EUR 160 million. Why did the group sell 30% of our shares for EUR 17 million?

Yes, yes. No, no, that's ...

Can you explain?

EUR 160 million is a correct number, EUR 17 million is also a correct number, but EUR 17 million is only price for the shares, right, that we sold. I think it refers to the public communication that we had in our current report, in which we also mentioned repayment of debt, which is debt that we used to finance the project. So this money came to us as well. So you need to add this to another. So in total, it was much more. And also, of course, you need to remember that we did not sell the asset itself. We did not sell the building. We sold shares in the company. So the company has the asset, but it also has the debt, right? The bank debt liabilities, et cetera. So when you sell the shares, you need to deduct from the value of the asset, the value of debt, right? And then we sell -- then you are selling 30% of that. So all of that is mathematically completely correct. But you need to remember that we did not sell directly the asset. It was just the shares.

Okay. I think it explains it. But sticking to the [indiscernible] Towarowa, I know that we don't want get into details because it still has to be surprised, but maybe some glimpse of information about the residential tower that we are going to deliver together with AFI.

Yes. We looked at it together with our JV partner, and we came up to the conclusion that -- as today's market situation is we are making much better returns on doing residential compared to doing PRS. So that is something that we're going to continue doing in the project going forward. And so what you're going to see going forward, you're going to see, as I said before, more offices as we all believe in the Office segment. We think that is a very, very interesting part of the market. And like I said before, there's a record low supply on the Warsaw market, which we will benefit by having more offices started up on Towarowa. The residential part is essential for us because we see a lot of interest from residential project in this area of the city. And it's not only us developing here, there's many other players developing on this market. So by us starting up more projects, we will not, in that way, compete with ourselves. We will just make the whole area much more interesting for new clients to invest in that area will bring more attention. We will have different pricing and different standards of the different buildings. So the buildings will not compete. They will complement each other. And I think -- and the way we are developing it together, this will make the whole area much more interesting. And what we're trying to do is pretty similar to what we did on Browary. We see a lot of residential, but they are not competing. They're having different standards, different adapting to the market. And that makes us widen our offer, not to the most luxury but a wider part of the segment. And I think we will get even more customers on Towarowa.

Yes. And our offer being diversified, is Towarowa still going to have a PRS component?

Towarowa will not have a PRS component. It will have a component of offices, Resi4Sale and retail in that area where we have restaurants in the ground floor, I can see around the whole area.

Okay. Thank you so much. So maybe let's change the subject to our Retail segment because we want to know more about our deal with Libero, how far in negotiations are we? And can we say about our schedule for this disposal?

We are not commenting any more than we have said in this presentation. We're saying that it's in advanced negotiation. We are progressing well. We see a huge interest, not only in Libero, but in the whole Retail segment across the whole market. And as you look through here, you see that footfall has decreased slightly in Libero this quarter, but that is coming from a huge renovation of the infrastructure network in Katowice where bridge and tunnels has been closed off, that had a small effect on the footfall. But what we see people are coming more seldom to this center, but are buying more when they are arriving to the center. So it doesn't have the effect of the turnover. But this is just a temporary effect. And in Q1 next year, all the roads and infrastructure will be up and running again, and then we will see that the footfall growth will continue.

Yes. So what about Galeria Mlociny? What are our plans about the shares that we have in this retail?

Like I said before, on Galeria Mlociny, we have been working a lot on the footfall. And we have not seen the full potential of Galeria Mlociny. We are now increasing the footfall. We're increasing the turnover every year, we have another 7%, 8% and 9%. And we think that already this year, we have seen that we are really on a good way of these trends. And by next year, we think that is the year where we'll start analyzing what to do with Galeria Mlociny, what is our next steps. But because this year it's too early, and we don't think we have seen the full potential of our investments. So this is something that we are looking to analyze closer in '26 -- late 2026, early 2027.

Okay. So this subject, we are going to talk more in a year, but maybe one question for Maciej, because first series of retail bonds will expire next year. And we have a question, will Echo use this opportunity to once again launch public offerings aimed at individual investors?

Well, I would say we don't plan that at the moment. We are more thinking about reducing our overall debt. So we will just use this maturity to repay these bonds as they become due.

And I think that is -- like Maciej saying, that is not about the bonds itself. It's like we have a totally different business model now with much more residential, much more cash payment coming in there, less investment into 100% offices, more into JVs, we will need less cash in our business. And we think it's a great idea to reduce debt, get a much more cash effective business in that way, being able to deliver more shareholders' return.

At the beginning of the presentation, you mentioned the Chlodna deal, really important one land sale and our viewers would like to know what was the profit on the sale?

We don't comment profit on individual assets, and we -- all of these things is recorded in our books. So it's -- but I think it's -- put a little bit light on this one. Chlodna was the investment that we acquired, and it was very small investments in our books and not really the investment that we're doing on a normal basis. And we got an offer that was very great for us, and we could reinvest that one into a new project where we think we could get better returns on our capital, and that's the decision we took to make this.

Okay. Thank you so much. I think we have a time for last one. And this one is going to summarize everything that you both mentioned during the presentation. So what are our plans regarding the future sales? Can you summarize it in the last final question, what projects we are looking to sell in the nearest future?

I think looking for Echo going forward, I think this was the right question looking back at the old Echo. I think for 2026, the right question is, how much more will you do in Resi4Sale in Archicom because that is where we're going to see the most of the growth. We're going to see most of the profit coming out of the sale of the individual units. How much more will you put into JVs. Our office sales, we will, of course, divest the offices that we have in ready and completed next year, but that will be a smaller part of what we're doing as a business going forward. And this will have a huge benefit for our shareholders that our business will be less bumpy as we will then coming up to a total level where we'll deliver much more predictable profits going forward, that will not be so much dependent on individual sales. But looking forward for us, we're going to divest something next year of the offices and potentially some retails. But most of all, we're going to start new projects in interesting locations. And we think with our new cash structure, we will have a huge possibility to take benefits of the market where we are in today where we see a lot of opportunities to continue growing.

Thank you, Nicklas. Thank you, Maciej. I think this is our time for today. So to our lovely viewers, thank you for joining us today, and we'll see you during the quarterly results. So if any question we might unanswered, please reach out to Grzegorz Iwanski, our Head of Investors or to me directly, and we'll talk to you. Thank you again, and see you soon.